European banks need a banking union to compete with Wall Street

Ultra-low interest rates were brought in by the ECB after the euro sovereign debt crisis of 2011, though they are expected to start rising again at the end of summer 2019.

Rising rates are good for banks as they are then able to lend out money to investors at a profitable rate of interest. Whereas, in the current environment, European banks are limited in their ability to make profits.

Several banks across Europe have sought to consolidate in recent years, especially in Italy and Spain, as they look for means of avoiding bankruptcy.

What Europe’s banking union has implemented, however, is the Single Supervisory Mechanism, which has seen the ECB take on certain supervisory tasks over the EU financial system, and the Single Resolution Fund.

Funded by euro zone banks, the Single Resolution Fund has been used as a last resort to rescue struggling banks in the bloc.

Yet, while the region’s banking union has evolved over the last couple of years, some member states remain cautious about integrating their banking systems with others across the region given certain discrepancies throughout the euro zone.

Source link

Share with your friends!

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest Business news
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.