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Conference Paper

Banks, Politics and European Monetary Union


Hellwig,  Martin F.
Max Planck Institute for Research on Collective Goods, Max Planck Society;

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Hellwig, M. F. (2019). Banks, Politics and European Monetary Union. In European Central Bank (Ed.), ECB Forum on Central Banking 2019: 20 years of European Economic and Monetary Union, Conference Proceedings (pp. 250-261).

Cite as: https://hdl.handle.net/21.11116/0000-000C-C17C-F
This contribution to the panel on the future to EMU discusses the tensions that arise from the fact that banks are, on the one hand, an essential element of the monetary transmission mechanism and, on the other hand, an integral part of local, regional or national polities. Banking union can eliminate or at least reduce some of the procras-tination that has allowed maintained bank weaknesses to persist and harmed the transmission of monetary policy but, whereas the SSM has been fairly successful, resolution is still not working properly and needs further reforms. At the same time, banking union suffers from the problem that interventions from Brussels or Frankfurt are seen as infringements of national sovereignty that lack political legitimacy. The conflict between supranational and national interests is ultimately irresolvable but, if EMU is to survive, measures must be taken to limit its impact.