The Incomplete Currency

Chapter 9The European and National Interventions on the Banking Systems

In this chapter we will analyse the decisions and initiatives taken in Europe to support the soundness and stability of the banks. In this regard it is useful to distinguish between the measures decided at the European level and those adopted unilaterally by some member countries to intervene in support of their national banking systems.

At the European level a complex and ambitious project is being carried out of Banking Union, with supervision to be centralised in a single authority (part of the ECB). A major objective of this project is to break the intimate link between banks and states, especially to prevent the recurrence of episodes of bail-out of a bank by its national government. The idea is therefore to foster greater “empowerment” of the banks with respect to market dynamics; in the event of a bank crisis, this will mean the need for a bail-in by shareholders, bondholders and possibly even depositors. At the level of individual Eurozone countries, many of these in recent years have intervened in support of their troubled banks, albeit with differentiated solutions between the periphery and the centre. Peripheral countries have adapted their national laws to allow banks to increase their levels of capitalisations through an appropriate accounting treatment of Deferred Tax Assets (or, more precisely, by softening the discipline that allows the conversion of these assets into Deferred Tax Credits, ...