The recent extensive package introduced by the Commission is the most comprehensive reinforcement of economic governance in the EU and the euro area since the launch of the Economic and Monetary Union. Broader and enhanced surveillance of fiscal policies, but also macroeconomic policies and...

The first comment argues that the current economic approach to EU state aid policy tends to become a general control of the effectiveness of all subsidies in the Member States. This goes far beyond the initial intention of the EU competition rules of Art. 87 to 89 EC Treaty. An economic approach...

Despite a formal 'no-bailout clause; we estimate significant net present value transfers from the European Union to Cyprus, Greece, Ireland, Portugal, and Spain, ranging from roughly 0.5% (Ireland) to a whopping 43% (Greece) of2010 output during the Eurozone crisis. We propose a model to analyze...

We analyze the determinants and the long-run consequences of government interventions in the eurozone banking sector during the 2008/09 financial crisis. Using a novel and comprehensive dataset, we document that fiscally constrained governments "kicked the can down the road" by providing banks...

We empirically investigate whether and how the ex-ante M&A activity of banks relate to their much debated bailouts and credit ratings during the 2008 financial crisis. Our M&A sample comprises of 1603 transactions performed by 41 large sized European banks over the period 1990-2006. We find that...

Using a sample of European banks and a series of events affecting governments' finances, we conduct an event study to examine whether there is a relationship between governments' fiscal difficulties and banks' stock returns. We find a significant reaction of banks' stocks to news concerning...

The €215 billion lent to Greece by her Eurozone siblings are likely among the very cheapest funding ever enjoyed by a sovereign borrower. Not only would the effective net interest rate so far be negative, but actually more so than those faced by essentially all countries lucky enough to have...

In this paper, I use a two-country model to investigate the incentives which lead one country to take charge of another country's debt. I show that, when direct transfers to residents cannot be perfectly targeted, the first country can be better off honoring the second country's liabilities,...

The unchecked build-up of imbalances during the 2000s exposed the euro area to the risk of sudden stops. Such risk materialized in 2009-10 and its consequences were amplified by the absence of adequate institutions. Europe embarked on a thorough process of reforming its economic governance. We...

The framing of ‘bail-in' as a key resolution tool within the body of the Bank Recovery and Resolution Directive (“BRRD”) has been hailed by many as the end of public bail-outs. For its effective functioning, policymakers and private counterparties have battled to renovate the liability...