The challenges of Europe's fourfold union. Bruegel Policy Contribution 2012/13, 16 August 2012

Five years after the first tremors in Europe’s banking system, what makes the crisis unique is the absence of a democratically accountable decision-making framework; there is an 'executive deficit' that compounds Europe’s democratic deficit. The author argues that the only way to resolve the crisis successfully is a sustained effort to achieve a 'fourfold union' agenda: banking union, fiscal union, competitiveness union and political union. Progress must be made in parallel on each of the four components. In particular, successful progress towards banking union requires a combination of short term action, including the establishment of a temporary resolution authority to identify undercapitalised banks and to restructure them, and longer-term measures, including the creation of permanent authorities for supervision, resolution and deposit insurance.

The changing landscape of financial markets in Europe, the United States and Japan. Bruegel Working Paper 2013/02, 18 March 2013

We compare the structure of the financial sectors of the EU27, Japan and the United States, looking at a set of 23 indicators. We find a large variation within the European Union in the structure of the financial sector. Using principal components analysis, we identify robust groups of EU countries. One group consists of the eastern European members that entered the EU more recently.These have substantially smaller financial sectors than the old member states. A second group can be classified as market-based (MBEU) and the third group is more bank-based (BBEU). We compare US, MBEU, BBEU, Eastern EU and Japan with the following main results. First, the groups within Europe are geographically related. Second, in many indicators, MBEU countries are closer to the (market-based) US, while BBEU countries more closely resemble Japan. Paradoxically, however, market-based EU countries also have large banking sectors. Banks in market-based countries have larger cross-border assets and liabilities, and derive a larger fraction of their income from fees, rather than interest income, than banks in bank-based countries. Finally, for most indicators, the ordering of groups of countries is quite stable over time, but while the crisis has had no impact on the relative ordering of the groups, it has slightly widened the gap between the US and all EU regions insome respects. We also find that during the crisis, substitution between market-based and bank-based sources of finance occurred in the US, and to a lesser extent in MBEU and BBEU countries.

Changes in the political elite, economy and society of Belarus: Appearances and reality. OSW Study 30/2008

In late 2006 and early 2007, relations between Russia and Belarus were hit by the most serious crisis in many years. In a setting of heightened tension, the Belarusian authorities decided to gradually modify their economic policy and thoroughly restructure the ruling class. The new situation created new, much more difficult challenges for the Belarusian opposition. The processes initiated by the authorities were not intended to bring about either the democratisation of public and political life or full economic liberalisation; their only purpose was to enable the regime to tackle new challenges and survive in the changing international context. Nevertheless, modernisation has been initiated in Belarus' authoritarian system of power, which until now was considered to be completely incapable of reform. This puts the country's main political and economic partners, including the European Union, in a new situation.

The Political Economy of Financial Crisis Policy. Bruegel Working Paper 2015/06, July 2015

Highlights • Government intervention to stabilise financial systems in times of banking crises ultimately involves political decisions. This paper sheds light on how certain political variables influence policy choices during banking crises and hence have an impact on fiscal outlays. • We employ cross-country econometric evidence from all crisis episodes in the period 1970-2011 to examine the impact political and party systems have on the fiscal cost of financial sector intervention. • Governments in presidential systems are associated with lower fiscal costs of crisis management because they are less likely to use costly bank guarantees, thus reducing the exposure of the state to significant contingent and direct fiscal liabilities. Consistent with these findings we find further evidence that these governments are less likely to use bank recapitalisation and more likely to impose losses on depositors.

Ukraine on the financial front – the problem of Ukraine’s foreign public debt. OSW COMMENTARY NUMBER 178|05.08.2015

One of the key challenges that Ukraine is facing is the scale of its foreign debt (both public and private). As of 1st April it stood at US$ 126 billion, which is 109.8% of the country’s GDP. Approximately 45% of these financial obligations are short-term, meaning that they must be paid off within a year. Although the value of the debt has fallen by nearly US$ 10 billion since the end of 2014 (due to the private sector paying a part of the liabilities), the debt to GDP ratio has increased due to the recession and the depreciation of the hryvnia. The value of Ukraine’s foreign public debt is also on the rise (including state guarantees); since the beginning of 2015 it has risen from US$ 37.6 billion to US$ 43.6 billion. Ukraine does not currently have the resources to pay off its debt. In this situation a debt restructuring is necessary and this is one of the top priorities for the Ukrainian government as well as for the International Monetary Fund (IMF) and its assistance programme. Without this it will be much more difficult for Ukraine to overcome the economic crisis.

European Bank Resolution: Making it work! Interim report of the CEPS Task Force on Implementing Financial Sector Resolution. CEPS Task Force Report, January 2016

From the start of 2016, new rules for bank resolution are in place – as spelled out in the Bank Recovery and Resolution Directive (BRRD) – across the EU, and a new authority (the Single Resolution Board, or SRB) is fully operational for resolving all banks in the eurozone. The implementation issues of the new regime are enormous. Banks need to develop recovery plans, and authorities need to create resolution plans as well as set the minimum required amount of own funds and eligible liabilities (MREL) for each bank. But given the diversity in bank structures and instruments at EU and global level, this will be a formidable challenge, above all with respect to internationally active banks. In order to explore ways in which the authorities and banks can meet this challenge, CEPS formed a Task Force composed of senior experts on banking sector reform and chaired by Thomas Huertas, Partner and Chair, EY Global Regulatory Network. This report contains its policy recommendations.