Falling short of expectations? Stress-testing the European banking system. CEPS Policy Brief No. 315, 15 January 2014

Before the ECB takes over responsibility for overseeing Europe’s largest banks, as foreseen in the establishment of a eurozone banking union, it plans to conduct an Asset Quality Review (AQR) throughout the coming year, which will identify the capital shortfalls of these banks. This study finds that a comprehensive and decisive AQR will most likely reveal a substantial lack of capital in many peripheral and core European banks. The authors provide estimates of the capital shortfalls of banks that will be stress-tested under the AQR using publicly available data and a series of shortfall measures. Their analysis identifies which banks will most likely need capital, where a public back stop is likely to be needed and, since many countries are already highly leveraged, where an EU-wide backstop might be necessary.

The Juncker Plan: From €21 to €315 billion, through smoke and mirrors. CEPS Commentary, 27 November 2014

On the face of it, the €315 billion euro in additional investment announced by Juncker to kickstart Europe’s economy should make a material difference. But, explains Daniel Gros, without actually having any margin of manoeuvre in the EU budget there cannot be any financing for new investment and there cannot be any real growth impulse. The European Commission should have made the completion of the internal market, in particular the integration of Europe’s energy markets, a precondition for any new investment plan.