Banking Union: A Federal Model for the European Union with Prompt Corrective Action. CEPS Policy Brief No. 282, 18 September 2012

The European Commission has published its proposals for the transfer of supervisory responsibilities to the European Central Bank (ECB),1 under Article 127(6) of the TFEU, providing a comprehensive and courageous ‘first step’ towards a European banking Union, the other steps being European deposit insurance and resolution procedures. However, on a number of issues the Commission’s chosen path raises questions that should be brought out in the open and fully recognized before final deliberation by the Council.

The fiscal implications of a banking union. Bruegel Policy Brief 2012/02 [3?], September 2012

Systemic banking crises are a threat to all countries whatever their development level. They can entail major fiscal costs that can undermine the sustainability of public finances. More than anywhere else, however, a number of euro-area countries have been affected by a lethal negative feedback loop between banking and sovereign risk, followed by disintegration of the financial system, real economic fragmentation and the exposure of the European Central Bank. Recognising the systemic dimension of the problem, the Euro-Area Summit of June 2012 called for the creation of a banking union with common supervision and the possibility for the European Stability Mechanism to recapitalise banks directly.

Europe's single supervisory mechanism and the long journey towards banking union. Bruegel Policy Contribution 2012/16, 4 October 2012

Problems in the banking system are at the core of the current crisis. The establishment of a banking union is a necessary (though not sufficient) condition for eventual crisis resolution that respects the integrity of the euro. The European Commission’s proposal for the establishment of a Single Supervisory Mechanism and related reform of the European Banking Authority (EBA) do not and cannot create a fully-fledged banking union, but represent a broadly adequate step on the basis of the leaders’ declaration of 29 June 2012 and of the decision to use Article 127(6) of the treaty as legal basis. The proposal rightly endows the European Central Bank (ECB) with broad authority over banks within the supervisory mechanism’s geographical perimeter; however, the status of non-euro area member states willing to participate in this mechanism, and the governance and decision-making processes of the ECB in this respect, call for further elaboration. Further adjustments are also desirable in the proposed reform of the EBA, even though they must probably retain a stopgap character pending the more substantial review planned in 2014.

Banking Union: Ireland vs. Nevada, an illustration of the importance of an integrated banking system. CEPS Commentary, 18 October 2012

Despite their surprising similarities – in size and their housing booms – Ireland and the American state of Nevada sharply parted company when it came to who bore responsibility for bailing out their failed banks when the booms turned to bust. This latest Commentary by Daniel Gros vividly illustrates the importance of that difference and thus the shock-absorbing capacity of an integrated banking system and a banking union.

Monetary policy and banking supervision: coordination instead of separation. CEPS Policy Brief No. 286, 12 December 2012

Introduction. Following the June 2012 European Council decision to place the ‘Single Supervisory Mechanism’ (SSM) within the European Central Bank, the general presumption in the policy discussions has been that there should be ‘Chinese walls’ between the supervisory and monetary policy arms of the ECB. The current legislative proposal, in fact, is explicit on this account. On the contrary, however, this paper finds that there is no need to impose a strict separation between these two functions. The authors argue, in fact, that a strict separation of supervision and monetary policy is not even desirable during a financial crisis when the systemic stability of the financial system represents the biggest threat to a monetary policy that aims at price stability. In their view, the key problem hampering the ECB today is that it lacks detailed information on the state of health of the banking system, which is often highly confidential. Chinese walls would not solve this problem. Moreover, in light of the fact that the new, proposed Supervisory Board will be composed to a large extent of representatives of the same institutions that also dominate the Governing Council, the paper finds that it does not make sense to have Chinese walls between two boards with largely overlapping memberships. In addition, it recommends that some members of the Supervisory Boards should be “independents” in order to reduce the tendency of supervisors to unduly delay the recognition of losses.

Effects of Spruce Budworm (Choristoneura fumiferana (Clem.)) Outbreaks on Boreal Mixed-Wood Bird Communities

This study examined the influence of a spruce budworm (Choristoneura fumiferana (Clem.)) outbreak on a boreal mixed-wood bird community in forest stands ranging in age from 0 to 223 yr. We asked if (1) patterns of species response were consistent with the existence of spruce budworm specialists, i.e., species that respond in a stronger quantitative or qualitative way than other species; (2) the superabundance of food made it possible for species to expand their habitat use in age classes that were normally less used; and (3) the response to budworm was limited to specialists or was it more widespread. Results here indicated that three species, specifically the Bay-breasted Warbler (Dendroica castanea), Tennessee Warbler (Vermivora peregrina), and Cape May Warbler (Dendroica tigrina), had a larger numerical response to the budworm outbreak. They responded with increases in density of up to tenfold over 4 or 5 yr. No other species responded with more than a twofold increase in the same time period. These species also showed a functional response by breeding more frequently in young stands aged 1–21 yr and intermediate stands aged 22–36 yr as budworm numbers increased. Our data also suggested that many species profited to a lesser extent from budworm outbreaks, but that this effect may be too subtle to detect in most studies. We found evidence of a positive numerical effect in at least 18 additional species in one or two stand-age categories but never in all three for any one species. Given the numerical response in many species and the potential influence of budworm on bird populations because of the vast extent of outbreaks, we believe that the population cycle of spruce budworm should be considered in any evaluation of population trends in eastern boreal birds.

Vesper Sparrows and Western Meadowlarks Show a Mixed Response to Cattle Grazing in the Intermountain Region of British Columbia

Livestock grazing in the shortgrass steppe of the Intermountain region of British Columbia is predicted to have significant effects on grassland habitats and their associated ground-nesting bird communities. We tested whether grazed and ungrazed sites could be discriminated on the basis of their vegetation communities, whether the abundance of two ground-nesting bird species, Vesper Sparrow (Pooecetes gramineus) and Western Meadowlark (Sturnella neglecta), differed between grazed and ungrazed sites, and whether vegetation variables found to differ between grazed and ungrazed plots could be used to predict the abundance of the two bird species at a fine scale. Grazed sites were easily distinguishable from a site that had been ungrazed for >30 years based on the structure and composition of their vegetation communities. However, more detailed grazing categories could not be distinguished on the basis of vegetation characteristics. Despite the existence of grazing effects on vegetation structure and composition, we found no consistent differences in abundance of Vesper Sparrows and Western Meadowlarks between the grazed and ungrazed sites. However, there was weak evidence that the abundance of both species was higher at fine-scale plots (100 m radius point count station) with less bare ground and taller vegetation. Bare ground cover was lower on grazed plots, but vegetation was taller on ungrazed plots. Combined, our results suggest that low intensity grazing leads to grassland habitat change with both negative and positive effects on Vesper Sparrows and Western Meadowlarks, resulting in no net change in their broad-scale abundance.

Population Trends of a Mixed-Species Colony of Humboldt and Magellanic Penguins in Southern Chile after Establishing a Protected Area

Worldwide marine protected areas (MPAs) have been designated to protect marine resources, including top predators such as seabirds. There is no conclusive information on whether protected areas can improve population trends of seabirds when these are further exploited as tourist attractions, an activity that has increased in past decades. Humboldt Penguins (Spheniscus humboldti) and Magellanic Penguins (S. magellanicus) breed sympatrically on Puñihuil Islets, two small coastal islands off the west coast of Chiloé Island (41° S) in southern Chile that are subject to exploitation for tourism. Our goal was to compare the population size of the mixed colony of Humboldt and Magellanic Penguins before and after protection from unregulated tourism and freely roaming goats in 1997. For this purpose, two censuses were conducted in 2004 and 2008, and the numbers compared with those obtained in 1997 by other authors. The proportion of occupied, unoccupied, and collapsed/flooded burrows changed between years; there were 68% and 34% fewer collapsed burrows in 2004 and 2008, respectively, than in 1997. For the total number of burrows of both species, we counted 48% and 63% more burrows in 2004 and 2008, respectively, than in 1997. We counted 13% more burrows of Humboldt Penguins in 2008 than in 1997, and for Magellanic Penguins, we estimated a 64% increase in burrows in 2008. Presumably, this was as a result of habitat improvement attributable to the exclusion of tourists and the removal of goats from the islets. Although tourist visits to the islets are prohibited, tourism activities around the colonies are prevalent and need to be taken into account to promote appropriate management.

Langmuir turbulence and deeply penetrating jets in an unstratified mixed layer

The influence of surface waves and an applied wind stress is studied in an ensemble of large eddy simulations to investigate the nature of deeply penetrating jets into an unstratified mixed layer. The influence of a steady monochromatic surface wave propagating parallel to the wind direction is parameterized using the wave-filtered Craik-Leibovich equations. Tracer trajectories and instantaneous downwelling velocities reveal classic counterrotating Langmuir rolls. The associated downwelling jets penetrate to depths in excess of the wave's Stokes depth scale, δs. Qualitative evidence suggests the depth of the jets is controlled by the Ekman depth scale. Analysis of turbulent kinetic energy (tke) budgets reveals a dynamical distinction between Langmuir turbulence and shear-driven turbulence. In the former, tke production is dominated by Stokes shear and a vertical flux term transports tke to a depth where it is dissipated. In the latter, tke production is from the mean shear and is locally balanced by dissipation. We define the turbulent Langmuir number Lat = (v*/Us)0.5 (v* is the ocean's friction velocity and Us is the surface Stokes drift velocity) and a turbulent anisotropy coefficient Rt = /( + ). The transition between shear-driven and Langmuir turbulence is investigated by varying external wave parameters δs and Lat and by diagnosing Rt and the Eulerian mean and Stokes shears. When either Lat or δs are sufficiently small the Stokes shear dominates the mean shear and the flow is preconditioned to Langmuir turbulence and the associated deeply penetrating jets.