Policy Center Lecture: Ewald Nowotny
Title: Perspectives on the Structure of Europe’s Banking Industry
Speaker: Ewald Nowotny, Governor, Austrian National Bank & Board Member, European Central Bank
The Great Financial Crises found Europe’s banking industry wanting. This also held true for its supervisory infrastructure. The upshot was that financial markets fragmented. Finally, in the summer of 2012, the nadir was reached. The implementation of monetary policy was structurally impaired. Even the singleness of its approach was threatened. To be effective, monetary policy has to rely on a resilient banking industry. This holds true, in particular, in the European case, where most of the external funding is bank-intermediated. With the implementation of the Single Supervisory Mechanism as well as the Single Resolution Mechanism, Europe’s financial markets are getting back on track. What are the pre-conditions for a banking sector capable of serving its purpose, i.e. managing risks and funding the economy? What industry structure is most appropriate? Will it be European?