Financial Insights - February 2014

| Point of View

In the February edition of Financial Insights Prof. dr. Clemens Kool outlines his vision for the monetary policy.
The global financial crisis of 2008 and the subsequent European debt crisis of 2010 brought to light fundamental problems in the institutional design of the euro area with regard to the banking system. The major issue is the principle that euro area countries can decide independently whether to allow a bank to fail and must bear the costs of an actual failure themselves.
These concerns have led to a readiness at European level to accept the idea of a European Banking Union (EBU). The European Commission drew up an initial proposal for the EBU in the autumn of 2012 and preparations are now well under way. The target start date is the end of 2014. In this paper Prof. Clemens Kool briefly explains why the EBU is a good idea in principle. At the same time he points out a number of risks and weaknesses in the current plans.
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Capgemini Financial Services offers, in cooperation with Prof. dr. Jacques Sijben and Prof. dr. Clemens Kool, quarterly a view at the current development at the global financial world.