IAI Commentaries, 18:25, April 2018
The economic crisis has underscored the need to reform institutions charged with regulating the financial architecture of the Eurozone. Since the introduction of the Single Resolution Mechanism (SRM) in 2014, however, all attempts at meaningful reform have failed.
Recent discussion has centred around the trade-off between market discipline, which implies the strict fulfilment of EU rules and regulations (the Six-Pack, Fiscal Compact and Two-Pack), and risk sharing, which calls for a European public backstop for banks and deposits and a common European plan of investments.
The disagreement between Euro area members reflects the larger, deep-seated conflict over the future of the European Monetary Union (EMU), which in turn further undermines the political feasibility of reform.
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