I analyze the optimal design of banking supervision in the presence of cross-border lending. Cross-border lending could imply that an individual bank failure in one country could trigger negative spillover effects in another country. Such cross-border contagion effects could turn out to be...

Most banking supervisory authorities are charged with multiple mandates in addition to their core responsibility of fostering the safety and soundness (S&S) of banks and the banking system. Some of these mandates may conflict with, or divert scarce supervisory resources away from, the core S&S...

A perceived need to increase nominal wage flexibility as a substitute for domestic monetary policy and a tendency to less wage moderation are likely to promote bargaining co-ordination and social pacts in the EMU. But such co-ordination is not likely to be sustainable in the long run, as it...