Europe needs a restart and reboot. This also means a more reasonable approach in the production of rules for the banking sector. In early July, the European Banking Authority (EBA) published a few hundred pages of new technical standards and guidelines on the bank recovery and resolution directive. Introducing the concepts of recovery/resolution planning, bail-in and orderly failure into many member states’ legal systems for the first time, the directive applies to all kinds of banks in the EU.
More generally, the whole corpus of EU legislation – both level one (primary legislation) and level two (technical standards) – is addressed indifferently to all types of banks, especially within the precincts of the banking union; that is, firms in the eurozone countries. Except for a few variations to be singled out mainly by national authorities, legislative provisions and technical standards alike apply both to large cross-border listed banking groups and to one-branch local firms devoted to retail customers. However, European community or co-operative banks did not cause the great crisis of 2008 and generally proved resilient and countercyclical. Therefore, is this the best way to secure the goals of legislation: to protect investors and taxpayers and enhance the real economy? Or should legislation apply proportionate rules to different types of subjects, according to the risk they pose to the economic environment?
