Towards Comprehensive Single Market Integration

In this paper the author investigates the costs and benefits of joining the Banking Union by non-euro area Member States of the European Union (EU). By critically analysing the institutional design and legal framework of the Banking Union, the author attempts to define the role of close cooperation arrangement in furthering integration within the single financial market. In doing so, the author analyses the prospects of the remaining non-euro area countries joining the Banking Union drawing on the lessons learned by Croatia and Bulgaria.

Kajetan Aleksander Sitko is a graduate of LL.B. Law and Politics degree at Queen Mary University of London and LL.M. Law and Finance degree at the Institute for Law and Finance (ILF) in Frankfurt am Main. Since September 2019 he works in horizontal supervision within the banking supervision arm of the European Central Bank. Crucially, he was involved in the recent review of Options and Discretions (O&Ds) and more recently has worked on the review of the crisis management and deposit insurance (CMDI) framework and the Banking Union completion related legislative projects. Previously, the author worked in the Corporate and Investment Banking division of Banco Santander's branch in Frankfurt am Main and completed several internships in the legal and finance industry.

Contents

Executive summary

Introduction

Chapter 1: Banking Union and the condition of European integration
1.1. Origins of the Banking Union
1.2. The existing components of the Banking Union
1.2.1. Single Supervisory Mechanism (SSM)
1.2.2. Single Resolution Mechanism (SRM)
1.3. The missing pieces of the Banking Union
1.3.1. European Deposit Insurance Scheme (EDIS)
1.3.2. Common fiscal backstop
1.3.3. Uniform insolvency regime

Chapter 2: Close cooperation: ambitious legal regime in fragile institutional context
2.1. The nature of Article 7 SSM Regulation
2.2.1. Intermediated authority
2.1.2. Representation gaps
2.1.3. The nature of ECB legal acts
2.2. Effective ambiguity?
2.2.1. Safeguarding the authority
2.2.2. Representation not relevant?
2.2.3. Room for manoeuvre in the existing institutional framework
2.3. Judicial remedies
2.4. Parallels with other governance arrangements in the EU

Chapter 3: Should the outs join the Banking Union?
3.1. Policy coordination in international banking
3.2. Structural characteristics of the European banking sector
3.2.1. Banking Union area
3.2.2. Outward vs. inward banking
3.3. Country-specific observations
3.3.1. Banking Union as an entryway to the euro: Bulgaria and Croatia
3.3.2. Alternative approach to policy coordination: Sweden and Denmark
3.3.3. Problems from within: Poland, Czech Republic, Hungary and Romania

Conclusion

Bibliography

Annex