The IMF feels like Europe has to support its banks more and
try to create a banking union, which would protect the EU from future shocks. The
IMF assessed the European banking and insurance sector and could see that a lot
has been done in response to financial crisis, however a lot more was still
needed, because the EU is still vulnerable since the growth could be lower than
expected or the market could lose its confidence. The Eurozone is still highly
affected by the financial crisis, its GDP is still not where it used to be,
banks still have high debts and government are not able to create stability. However
many measures have been taking in order to reestablish confidents European
assets. For example banks have been
trying to raise new capital and the EU a single Eurozone regulator was created
(controlled by the European Central Bank). But at the moment the banking sector
is restricted and its bad debts negatively affect Europe’s economy.
http://money.cnn.com/2013/03/15/news/economy/europe-banks-imf/index.html?iid=SF_E_Lead
1 comment:
A banking union may not be a bad idea given that the EU has integrated the economies of its members. Common banking regulations and restrictions would reduce the risk of a single nation messing up. However, if a nation does mess up its banking and financial sector, then the spillover effects in other integrated nations would be greater if all the banking sectors are also integrated through a single banking union.
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