Principles of a Two-Tier European Deposit (Re-)Insurance System. CEPS Policy Brief No. 287, 17 April 2013.

There is general agreement that banking supervision and resolution have to be organised at the same level. It is often argued, however, that there is no need to tackle deposit insurance because it is too politically sensitive. This note proposes to apply the principles of subsidiarity and re-insurance to deposit insurance: Existing national deposit guarantee schemes (DGSs) would continue to operate much as before (with only minimal standards set by an EU directive), but they would be required to take out re-insurance against risks that would be too large to be covered by them. A European Reinsurance Fund (EReIF) would provide this reinsurance financed by premia paid by the national DGSs, just as any reinsurance company does in the private sector. The European Fund would pay out only in case of large losses. This ‘deductible’ would provide the national authorities with the proper incentives, but the reinsurance cover would stabilize depositor confidence even in the case of large shocks. Ideally the national DGSs would be responsible also for resolution. Experience has shown banking systems are more stable if deposit insurers are also responsible for resolution. The approach proposed here could thus be also used to design the ‘Single Resolution Mechanism’ (SRM) which is being discussed as a complement to the ‘Single Supervisory Mechanism’ (SSM). It will of course take time to build up the funding for such a reinsurance fund. This approach is thus not meant to deal with legacy problems from the current crisis.

Care for the old rather than sleepwalk into war in East Asia. CEPS Commentary, 23 June 2014

In view of the demographic dynamics of East Asia, in this commentary Wolfgang Pape makes a plea for a kind of ‘geriatric peace’ in the region rather than further territorial disputes and expensive military build-up.

Ever further from Moscow. Russia's stance on Central Asia. OSW Study 48/2014

The post-Soviet countries of Central Asia are important for Moscow as a potential source of danger; as a site of its relationships with China, the West and the Islamic world; and not least as a space covered by Russia’s integration initiatives. Since the collapse of the USSR, Russian influence in this region has undergone a far-reaching erosion. The Kremlin’s consistent actions to build up the Eurasian Union, as well as the threat of destabilisation in region after the ISAF operation in Afghanistan winds up in 2014, have slowed down this process, although it is unlikely to be reversed. The current ‘state of possession’ (i.e. the instruments and assets which Russia possesses) still ensures Moscow a minimum level of control over the region, which means that the activity of other global players is limited. This situation may change in tandem with a rise in their ambitions, especially with the possible involvement of China in the field of ‘hard’ security.

The ICC Debate and the EU-U.S. Struggle for Influence: The Case of the Balkan-6. ACES Working Paper No. 11, October 2007

The objectives of the European Union (EU) and the United States (US) for the countries of the Balkan region are generally assumed to be complementary. They both stress and condition their support and assistance on the progress that these countries make with regards to economic modernization, build-up of social institutions, and respect for international law. However, this rhetoric doesn't always match the facts on the ground. Often, instead of dealing with a cohesive set of policy recommendations, the countries in the region are faced with contradictory alternatives and zero-sum choices. The debate over the development of the International Criminal Court (ICC) was such a case. It centered on whether the countries in the region should exempt US personnel from the jurisdiction of the Court while in the country and thus rendering them immune from prosecution for any crimes committed for which the US courts were not willing or able to take any action. The final outcome was mixed. Three of the countries - Croatia, Serbia (and Montenegro), and Slovenia - decided not to give in to US pressure, while the remaining three - Albania, Bosnia and Herzegovina, and Macedonia - ignored the pleas and threats of the EU and of the various international non-governmental organizations and decided to sign Bilateral Immunity Agreements (BIAs) with the US. How can one explain such divergent outcomes? I argue that the credibility of actors involved played an important role in determining whether threats coming from the US or the EU were more credible, thus tipping the scales in favor of signing BIAs with the US. However, the issue of threat credibility serves only to narrow down the choices of actors. Further determination of the outcome necessitates a look at the nature of the security context in which these countries exist and operate.

Dealing with the Fallout: West Germany's Response to the Solange Decision (1974). ACES Working Papers, 2011

The European Union's powerful legal system has proven to be the vanguard moment in the process of European integration. As early as the 1960s, the European Court of Justice established an effective and powerful supranational legal order, beyond the original wording of the Treaties of Rome through the doctrines of direct effect and supremacy. Whereas scholars have analyzed the evolution of EU case law and its implications, only very recent historical scholarship has examined how the Member States received this process in the context of a number of difficult political and economic crises for the integration process. This paper investigates how the national level dealt with these fundamental transformations in the European legal system. Specifically, it examines one of the Union's most important member states, the Federal Republic of Germany. Faced with a huge number of cases dealing with European law, German judges dealt with the supremacy of European law very cautiously, negotiating between increasingly polarized academic, public and ministerial debates on the question throughout the 1960s. By the mid 1970s, the German Constitutional Court famously limited the power of the ECJ in its Solange decision (1974). This was an expression of a broader discourse in Germany from 1968 onwards about the qualitative nature of democracy and participation in public life and was in some aspects a marker, at which the German elites felt comfortable expressing the value of their national constitutional system on the European stage. This paper examines the political, media and academic build up and response to the Constitutional Court's decision in the 1970s, arguing that the national "reception" is central to understanding the dynamics and evolution of European Union legal history.

Squaring the cycle: capital flows, financial cycles, and macro-prudential policy in the euro area. Bruegel Working Paper 2015/14, November 2015

• Before the financial and economic crisis, monetary policy unification and interest rate convergence resulted in the divergence of euroarea countries’ financial cycles. This divergence is deeply rooted in the financial integration spurred by currency union and strongly correlated with intra-euro area capital flows. Macro-prudential policy will need to deal with potentially divergent financial cycles, while catering for potential cross-border spillovers from domestic policies, which domestic authorities have little incentive to internalise. • The current framework is unfit to deal effectively with these challenges. The European Central Bank should be responsible for consistent and coherent application of macro-prudential policy, with appropriate divergences catering for national differences in financial conditions. The close link between domestic financial cycles and intra-euro area capital flows raises the question of whether macro-prudential policy in the euro area can be compatible with free flows of capital. Financial cycle divergence had its counterpart in the build-up of macroeconomic imbalances, so effective implementation of the Macroeconomic Imbalance Procedure would support and strengthen macro-prudential policy.

Financial risks and opportunities in the time of climate change. Bruegel Policy Brief ISSUE 2016/02 APRIL 2016

Real economic imbalances can lead to financial crisis. The current unsustainable use of our environment is such an imbalance. Financial shocks can be triggered by either intensified environmental policies, cleantech breakthroughs (both resulting in the stranding of unsustainable assets), or the economic costs of crossing ecological boundaries (eg floods and droughts due to climate change). Financial supervisors and risk managers have so far paid little attention to this ecological dimension, allowing systemic financial imbalances resulting from ecological pressures to build up. Inattention also leads to missed economic and financial opportunities from the sustainability transition.

Mellowing Meroni: Hows ESMA can help build the single market. CEPS Commentaries, 18 February 2014

In examining the long-awaited opinion given January 22nd by the CJEU in the case concerning the European Securities and Markets Authority (ESMA), this Commentary argues that the ruling is important for the insights it yields into the modern understanding of the Meroni non-delegation doctrine. The authors, Jacques Pelkmans and Marta Simoncini, aim to extract the potential implications of the ESMA case for the place and significance of the Meroni doctrine in building up the single market. They demonstrate that the ESMA case is yet another manifestation of a slow process of “mellowing Meroni’, which is a critical condition for a new single market strategy aiming to end the remaining fragmentation of the single market – not only in financial markets but also in network industries – and to ensure its ‘proper functioning’.