TY - RPRT A1 - Mack, Sebastian T1 - How Does Differentiated Integration Work in the EU Financial Sector? Spotlight on Banking Union N2 - Five years after the entry into force of the Banking Union, this Policy Paper assesses its effectiveness as a form of differentiated integration. This case study presents the legal and organisational dimensions of the Banking Union and describes its accountability mechanisms and procedures. At the heart is the question of whether the creation of the Banking Union has been effective in promoting integration among its members while avoiding distortions in the Single Market. To this end, also the impact of the Banking Union on the political unity in the European Union is analysed. This Policy Paper finds that the Banking Union has enhanced European integration in the financial sector without jeopardising the functioning of the internal market. Although the Banking Union is still incomplete, the benefits of participation create centripetal forces that are attractive also to non-euro countries. Y1 - 2020 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-36847 ER - TY - RPRT A1 - Mack, Sebastian T1 - Prepare for the worst - How to make Europe’s bank crisis management framework fit for purpose N2 - Amid a severe health, social and economic crisis, banks again take centre stage on the political agenda. This policy paper explains why decisionmakers are worried about a looming banking crisis, sets out the existing European bank crisis management framework and makes proposals for addressing its shortcomings in readiness for a possibly systemic banking crisis. Instead of taking the supposedly easy way out and bailing out banks again, now is the right time to prepare for the worst in Europe’s bank crisis management framework. Y1 - 2020 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-36982 ER - TY - RPRT A1 - Mack, Sebastian T1 - Beyond transparency: Getting serious about greening Europe’s financial system N2 - The financial sector must divest from unsustainable business. This is imperative to achieve a climate-neutral economy and to safeguard financial stability. The European sustainable finance regulatory agenda of 2018 launched important initiatives that increase transparency on climate risks. Now it is time to move to the second stage and incorporate climate risks in the risk models and capital requirements of banks, pensions funds and insurance firms. This will reduce their exposure to potential losses from climate risks and at the same time render sustainable investment alternatives more attractive. Y1 - 2021 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-37334 U6 - https://doi.org/10.48462/opus4-3733 ER - TY - RPRT A1 - Guttenberg, Lucas A1 - Mack, Sebastian T1 - Building EU green bonds that deserve their name N2 - The EU should seize the day: It should issue parts of the Recovery Instrument debt as green bonds and thereby boost that burgeoning market. But it is important to manage expectations: Issuing green bonds alone will not ‚green‘ recovery spending. This will depend on the criteria for climate-friendly spending in the legal texts governing the Recovery Instrument – and these so far lack teeth. So, there is a substantial risk that EU green bonds will set the wrong precedent now if backed by weak criteria. This would pre-empt future legislative work on the final EU green bond standard. If the criteria for climatefriendly spending are not strengthened, the Commission should scale back its ambition and should only issue green bonds for measures that fully match the criteria set out in the EU Taxonomy Regulation. Y1 - 2020 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-36885 ER - TY - RPRT A1 - Mack, Sebastian T1 - EU banks’ vulnerabilities - Capital conservation key to withstanding Corona crisis N2 - COVID-19 will hit financial institutions with a substantial time lag, but the coming storm will be fierce. The EU banking sector is entering the troubled waters of the Corona crisis with four major vulnerabilities: (1) Market and (2) funding liquidity risks have been mitigated by bold policy measures at EU and national level. (3) Concentration risk in banks’ sovereign exposures could be addressed by a European recovery fund. The immense economic fallout will further depress banks’ already weak (4) levels of profitability. Losses will erode banks’ capital base, putting their viability at severe risk. Monetary, fiscal and prudential emergency measures are keeping the real economy afloat but fail to enhance banks’ resilience. To withstand the crisis, EU policymakers should require banks to suspend all discretionary distributions and preserve capital instead. Y1 - 2020 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-35234 ER - TY - RPRT A1 - Mack, Sebastian T1 - Turning green into gold - How to make the European green bond standard fit for purpose N2 - Green bonds can play an important role when it comes to financing a more sustainable European economy. However, lack of transparency in today’s market for them prevents green bonds from achieving their full potential. The European Commission’s proposal for a European green bond standard (EuGBS) does little to fight greenwashing and foster investor confidence. To establish the EuGBS as the new gold standard, the European Parliament and EU Council should improve it in three respects. They should (i) strengthen its environmental credentials, (ii) regulate the entire green bond market and not just the EuGBS niche, and (iii) ensure the enforceability of investor rights. That way, a credible EU public standard can become the new benchmark on financial markets and make a positive impact on the environment. KW - Green bonds Y1 - 2022 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-42935 UR - https://www.delorscentre.eu/en/publications/detail/publication/green-bond-standard ER - TY - RPRT A1 - Mack, Sebastian T1 - The final piece of the Basel III jigsaw fits - Banks and unrated corporates can handle the output floor N2 - The European Commission has proposed implementing the outstanding elements of the international banking reforms agreed in the wake of the global financial crisis. The final Basel III rules are designed to curb any underestimating of risks by banks when using internal models. The introduction of the output floor as lower bound for determining banks’ capital requirements will foster fair competition between banks using internal models and those that do not. The output floor will predominantly affect loans to large unrated corporates. Sebastian Mack assumes that the resulting capital increase will be digestible for the banks with only limited effects on the real economy. Requiring all EU corporates to seek an external credit rating would not reduce the impact of the output floor as only a fraction of these firms demonstrates high creditworthiness. However, increasing the rating coverage of EU corporates would provide banks with additional information on borrowers and thus improve their risk management capabilities. In the absence of any public European rating agency, national central banks should follow the example of the Banque de France and establish public rating registers for large EU corporates. KW - Basel 3; unrated corporates; banking reforms Y1 - 2021 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-42510 UR - https://www.delorscentre.eu/en/publications/detail/publication/output-floor ER - TY - RPRT A1 - Mack, Sebastian A1 - Guttenberg, Lucas T1 - After the German election: What's next in EU economic governance? N2 - The new German government will face a number of unresolved issues of varying urgency when it comes to EU economic governance. In the case of the fiscal rules, there is an urgent need for a decision on how to proceed after 2022. In the medium term, the future of EU finances and economic policy coordination is open; both have undergone drastic changes as a result of the Recovery Instrument. Last but not least, the new German government must decide whether and how to break the deadlock in negotiations on completing the banking union and breathe new life into the capital markets union. KW - German 2021 elections; economic governance Y1 - 2021 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-42434 UR - https://www.delorscentre.eu/en/publications/detail/publication/what-next-in-european-fiscal-politics ER - TY - RPRT A1 - Mack, Sebastian T1 - Never waste a good crisis: European banking regulation in the pandemic N2 - The regulatory framework for banks introduced in the aftermath of the global financial crisis was designed to provide financial stability in good and bad times. Given an external shock, capital buffers are meant to cushion losses and prevent banks from pro-cyclical deleveraging. However, insufficient accumulation of easily releasable buffers ahead of the pandemic, combined with banks‘ unwillingness to use the available ones, made European decision-makers tweak hard banking law during the pandemic. In his policy brief, Sebastian Mack shows that microprudential, monetary and fiscal policy measures together averted a credit crunch. But Europe should revise its macroprudential framework so that it is fully functional in the next crisis. KW - banking regulation; pandemic Y1 - 2021 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-42474 UR - https://www.delorscentre.eu/en/publications/detail/publication/never-waste-a-good-crisis ER - TY - RPRT A1 - Mack, Sebastian T1 - Don’t change horses in midstream – How to make NGEU bonds the euro area’s safe asset N2 - The bonds financing the European Union’s recovery remain short of being the much-hoped-for safe asset of EU monetary union (EMU). However, with the right reforms they could well turn out to be just that. To earn safe asset status, the volume of EU debt should increase, EU borrowing made permanent, and the ECB treat supranational EU bonds in a more favourable manner. The flaws associated with failing to be a eurozone-only instrument are offset by remarkable fiscal and democratic benefits. So, if the NextGenerationEU (NGEU) pilot project – limited in time and tailored specifically to fighting the coronavirus pandemic – turns out to be to everybody’s benefit, then member states should seize the opportunity and extend it before debt is repaid as of 2028. Y1 - 2021 UR - https://nbn-resolving.org/urn:nbn:de:kobv:b1570-opus4-42361 UR - https://www.delorscentre.eu/en/publications/detail/publication/safe-asset ER -