Europe must get ready for a banking crisis

Europe’s banks have long been slow to integrate across borders, but this is changing fast. ‘Pan-European banks’, whose activities span several EU countries, are rapidly emerging, and are likely to enhance the overall contribution of financial services to economic growth.

Meanwhile, financial stability arrangements, notably banking supervision, remain nationally anchored. This creates significant risks in the event of a crisis involving a pan-European bank. Faulty cross-border coordination and diverging national views could seriously hamper the ability
of the authorities to respond speedily and effectively to an unfolding financial crisis.

Bruegel: Policy Brief, No.3, 2007: Is Europe Ready for a Big Banking Crisis? http://veron.typepad.com/main/files/BruegelPolicyBrief_310807.pdf

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