Abstract

The European Banking Authority (EBA), an EU agency that works to ensure effective and consistent prudential regulation and supervision across the European banking sector as a whole, was established several years before the European Central Bank (ECB) became responsible for the prudential supervision of euro area banks. The ECB’s assumption of supervisory responsibilities has prompted searching questions about whether the EBA can continue to add value. The EBA could function as the bridge between the ECB and the supervisory authorities of the Member States that do not participate in European Banking Union and, as such, could help to preserve the integrity of the Single Market. This article locates the EBA’s prospects for success in this role more in its ability to manage co-existence than to direct the conduct of supervision. The inquiry is placed within lines of governance scholarship that have moved away from simple ‘command and control’ models to more complex frameworks. The inquiry is supported by detailed examination of the EBA’s performance in key areas, including rule-making, interpretation, and stress testing. Close study reveals that the EBA cannot be expected significantly to prove its value on the supervisory side through its use of formal intervention powers because these powers are an uneasy fit with its hybrid structure and governance arrangements. This finding does not mean that the EBA is incapacitated: rather, the fact that its effectiveness relies more on facilitation than on threats suggests that the EBA is actually well-equipped to make progress in its unifying role.

Highlights

  • 1.1 A Milestone?The European Banking Authority (EBA) marked 5 years of operation in January 2016.1 In terms of simple longevity, 5 years hardly seems like a major milestone in the life of a public body but given the exceptional intensity of the period it has lived through since 2011, the end of the fifth year of its existence is an opportune moment to critically examine the role of the EBA.2 With the emphasis in financial regulatory policy shifting from the restoration of stability to the growth agenda, there is a strong sense that a page has turned.3 The question now is whether the EBA has put down sufficiently strong roots to be able to adapt effectively and remain relevant

  • The EBA could function as the bridge between the European Central Bank (ECB) and the supervisory authorities of the Member States that do not participate in European Banking Union and, as such, could help to preserve the integrity of the Single Market

  • The nub of the problem for the EBA is the allocation of responsibility for prudential supervision to the European Central Bank (ECB) and the accompanying centralised institutional architecture for resolution, which together are the key elements of European Banking Union (EBU)

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Summary

A Milestone?

The European Banking Authority (EBA) marked 5 years of operation in January 2016.1 In terms of simple longevity, 5 years hardly seems like a major milestone in the life of a public body but given the exceptional intensity of the period it has lived through since 2011, the end of the fifth year of its existence is an opportune moment to critically examine the role of the EBA. With the emphasis in financial regulatory policy shifting from the restoration of stability to the growth agenda, there is a strong sense that a page has turned. The question now is whether the EBA has put down sufficiently strong roots to be able to adapt effectively and remain relevant. The European Banking Authority (EBA) marked 5 years of operation in January 2016.1 In terms of simple longevity, 5 years hardly seems like a major milestone in the life of a public body but given the exceptional intensity of the period it has lived through since 2011, the end of the fifth year of its existence is an opportune moment to critically examine the role of the EBA.. With the emphasis in financial regulatory policy shifting from the restoration of stability to the growth agenda, there is a strong sense that a page has turned.. The question now is whether the EBA has put down sufficiently strong roots to be able to adapt effectively and remain relevant. The Chair of the EBA, Andrea Enria, has acknowledged that on the supervisory front his organisation faces an ‘existential search’ for a ‘value-added’ contribution.

The Changing World
17 The ECB recovers supervisory expenditures via industry levies
53. On the development of the ECB Supervisory Manual
Situating the EBA’s Quest for Relevance in Governance Scholarship
32 For a useful overview on new governance
The EBA in Action
The EBA’s Contribution to the Development of the Single Rulebook in Banking
Regulatory Products and the EBA’s Working Methods
Shifting the Emphasis from Regulation to Supervision
Interpreting the Rulebook
Enforcing the Rulebook
Standardisation of Supervisory Processes
22. For a general overview
69. For overviews
Supervisory Activity and Internal Governance
The Danger of Responsibility Without Power
Conclusion
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