Italy and the Banking Union in the Post-Crisis Period
Abstract
IAdhering to the integration processes in Europe from their very beginning, Italy remains one of the EU key participants. In recent decades, however, the country’s traditional problem of financial instability has become increasingly acute, taking into account that its collapse can quickly spread to the rest of the eurozone. In this regard, preventing Italian banks’ crises becomes a priority for all eurozone members. The purpose of the article is to analyze the effectiveness of the general rules for resolving banking crises in the eurozone introduced by the Banking Union, using the Italian case. The emphasis is put on the peculiarities of Italy’s application of the new principle of bank liquidity problems settlement - bail-in. This mechanism was originally designed to minimize the state recapitalization of banks as a measure of smoothing financial crises’ consequences, and, therefore, shift the burden of responsibility for “saving” banks from taxpayers to the financial sector. The article analyzes how the Italian government has continued to provide support to national banks at the expense of the budget since 2016, taking advantage of the ambiguity of the Banking Union rules. The impact of such precedent on other Eurozone countries is underlined, as they may also act in circumvention of the established procedures. The author states that the current global situation with the coronavirus pandemic has once again put the banking sector of the eurozone countries and, in particular, Italy, in a critical situation. Now the anti-crisis measures taken at both national and supranational levels can become decisive in determining the future of the EU as an interstate association. As a conclusion, the author suggests one of the solutions to the problem - modification of the Banking Union rules through a clearer and unambiguous formulation of key concepts in its legal framework, which would remove obstacles to the further integration process.
References
1. Pishchik V. YA. Institucional’nye mekhanizmy regulirovaniya vneshnih disbalansov v evropejskom Ekonomicheskom i valyutnom soyuze//Ekonomika. Nalogi. Pravo. – 2018. – T. 11. – №. 6.
2. Saling Korneliya, Gusakov Nikolaj Pavlovich. Bankovskij soyuz ES: problemy finansovoj stabil’nosti// Sovremennaya Evropa. 2018. №4 (83).
3. Shchepeleva M. A. Podhody k ocenke riska finansovogo sektora//Vestnik MGIMO
4. Barbagallo C. Veneto Banca e Banca Popolare di Vicenza //Senato della Repubblica–Camera dei Deputati, Commissione Parlamentare di inchiesta sul sistema bancario e finanziario, Rome. – 2017.
5. BIS. Definition of capital in Basel III. URL: https://www.bis.org/fsi/fsisummaries/defcap_ b3.pdf (accessed 1 May 2020)
6. Coletta M., Santioni R. Le Obbligazioni Bancarie Nel Portafoglio Delle Famiglie Italiane // Bank of Italy Occasional Paper. – 2016. – №. 359. 7.
7. Commission decision of 22.11.2015 on the State Aid. URL: https://ec.europa.eu/competition/ state_aid/cases/261428/261428_1951636_241_2.pdf (accessed 1 May 2020)
8. EBA Basel monitoring exercise. URL: https://eba.europa.eu/eba-publishes-results-of-the-basel-iii-monitoring-exercise-as-of-of-31-december-2014 (accessed 1 May)
9. EU-wide stress testing. URL: https://eba.europa.eu/risk-analysis-and-data/eu-wide-stress-testing (accessed 1 May 2020)
10. European Banking Authority. EBA at a glance. URL: https://eba.europa.eu/about-us/eba-at-a-glance (accessed 1 May 2020)
11. European Banking Authority. Pandemic emergency purchase programme (PEPP). URL: https://www.ecb.europa.eu/mopo/implement/pepp/html/index.en.html (accessed 5 May 2020)
12. European Banking Authority. Results of 2014 EU-wide stress test. URL: https://eba.europa. eu/sites/default/documents/files/documents/10180/851779/634773ab-9996-498f-be71-5cb5be041c82/2014%20EU-wide%20ST-aggregate%20results.pdf?retry=1. (accessed 1 May 2020)
13. European Banking Authority. Risk assessment of the European banking system. – Publications Office of the European Union, 2020.
14. European Commission. Press release. 25 June 2017. URL: https://ec.europa.eu/commission/ presscorner/detail/en/IP_17_1791 (accessed 1 May 2020)
15. European Commission. Press release. 4 July 2017. URL: https://ec.europa.eu/commission/ presscorner/detail/en/IP_17_1905 (accessed 5 May 2020)
16. European Commission. Press release. 7 June 2017. URL: https://ec.europa.eu/commission/ presscorner/detail/en/IP_17_1556 (accessed 1 May 2020)
17. European Commission. State Aid Scoreboard 2019. URL: https://ec.europa.eu/competition/ state_aid/scoreboard/index_en.html (accessed 1 May 2020)
18. European Council. Single Resolution Mechanism. URL: https://www.consilium.europa.eu/ en/policies/banking-union/single-resolution-mechanism/ (accessed 1 May 2020)
19. European parliament. Banks Net Exposure to Home Sovereign. 23 March 2015. URL: https:// www.europarl.europa.eu/RegData/etudes/ATAG/2015/542651/IPOL_ATA(2015)542651_ EN.pdf (accessed 1 May 2020)
20. European parliament. Briefing. July 2017. URL: https://www.europarl.europa.eu/RegData/ etudes/BRIE/2017/587392/IPOL_BRI(2017)587392_EN.pdf (accessed 2 May 2020)
21. Gros D. Who holds Italian government debt? A Primer. CEPS Policy Insight No 2019-11/June 2019. – 2019. P. 3.
22. Il pensionato suicida, il racconto della moglie: «È tardi, lei ha firmato» // Corriere della
23. sera. URL: https://roma.corriere.it/notizie/cronaca/15_dicembre_11/pensionato-suicida-racconto-moglie-tardi-lei-ha-firmato-5394d51c-9fd6-11e5-9e42-3aa7b5e47d96.shtml (accessed 4 May 2020)
24. IMF. Transcript of the April 2020 Fiscal Monitor Press Briefing. URL: https://www.imf.org/en/ News/Articles/2020/04/15/tr041520-transcript-of-the-april-2020-fiscal-monitor-press-briefing (accessed 5 May 2020)
25. International Monetary Fund. Country report 20/81. – 2020.
26. Italy emerges as biggest obstacle to eurozone banking union // Financial Times. URL: https:// www.ft.com/content/b9dea3b6-3384-11ea-a329-0bcf87a328f2?segmentid=acee4131-99c2-09d3-a635-873e61754ec6 (accessed 4 May 2020)
27. Italy government approves rescue of Popolare di Bari bank// Reuters. URL: https://www. reuters.com/article/us-italy-banks-popolare-di-bari-decree-idUSKBN1YJ0N9 (accessed 4 May 2020)
28. L’Osservatorio sui conti pubblici italiani: il debito italiano potrebbe salire al 157,6% del Pil
29. // La Stampa. URL: https://www.lastampa.it/economia/2020/04/11/news/ocpi-il-debito-italiano-potrebbe-salire-al-157-6-del-pil-1.38707464 (accessed 6 May 2020)
30. OJC. Communication from the Commission (Banking Communication)//Official Journal of the European Union. – 2013.
Review
For citations:
Shmalko A. Italy and the Banking Union in the Post-Crisis Period. International Aspect. 2020;1(1):22-32. (In Russ.)