Skip to main content

European Parliament Candidates Have a Unique Opportunity to Advocate for Banking Union Transparency and Accountability

This is reposted from the original on the Hertie School of Governance European Elections blog.

The discussion of issues around the European Parliament Elections has been beating around the bush for quite some time now. Karlheinz Reif and Hermann Schmitt famously described European Elections as ”second-order elections”, in that they are secondary to national elections. A few weeks ago on this blog Andrea Römmele and Yann Lorenz argued that the current election cycle has been characterised by personality politics between candidates vying for the Commission presidency, rather than substantive issues.

However, the election campaigns could be an important opportunity for the public to express their views on and even learn more about one of the defining changes to the European Union since the introduction of the Euro: the European Banking Union.

Much of the framework for the Banking Union has been established in the past year after intense debate between the EU institutions. A key component of the Union is that in November 2014, the European Central Bank (ECB) will become the primary regulator for about 130 of the Euro area’s largest banks and will have the power to become the main supervisor of any other bank, should it deem this necessary to ensure ”high standards”.

A perennial complaint made against the EU is that it lacks transparency and accountability. While there are many causes of this (not least of which is poor media coverage of EU policy-making), the ECB’s activities in the Banking Union certainly are less than transparent according to the rules currently set out. As Prof. Mark Hallerberg and I document in a recent Bruegel Policy Note, financial regulatory transparency in Europe and especially the Banking Union is very lacking. Unlike in another large banking union –the United States, where detailed supervisory data is released every quarter – the ECB does not plan to regularly release any data on the individual banks it supervises.

This makes it difficult for citizens, especially informed watchdog groups, to independently evaluate the ECB’s supervisory effectiveness before it is too late, i.e. before there is another crisis.

The European Parliament has been somewhat successful in improving the transparency and accountably (paywall) of the ECB’s future supervisory activities. Unlike originally proposed, the Parliament now has the power to scrutinise the ECB’s supervisory activities. It will nonetheless be constrained by strict confidentiality rules in its ability to freely access information and publish the information it does find.

In our paper, we also show how a lack of supervisory transparency is not exclusive to EU supervisors – the member state regulators, who will still directly oversee most banks, are in general similarly opaque. We found that only 11 (five in the Eurozone) out of 28 member states regularly release any supervisory data. Member state reporting of basic aggregate supervisory data to the European Banking Authority is also very inconsistent.

European Parliamentarians could use the increased attention that they receive during the election period to improve public awareness of the important role they have played in improving the transparency and accountability of new EU institutions. Perhaps, after the election, they could even use popular support that they may build for these activities during the election period to get stronger oversight capabilities and improve financial supervisory transparency in the European Banking Union.

Comments

Popular posts from this blog

Showing results from Cox Proportional Hazard Models in R with simPH

Update 2 February 2014: A new version of simPH (Version 1.0) will soon be available for download from CRAN. It allows you to plot using points, ribbons, and (new) lines. See the updated package description paper for examples. Note that the ribbons argument will no longer work as in the examples below. Please use type = 'ribbons' (or 'points' or 'lines'). Effectively showing estimates and uncertainty from Cox Proportional Hazard (PH) models, especially for interactive and non-linear effects, can be challenging with currently available software. So, researchers often just simply display a results table. These are pretty useless for Cox PH models. It is difficult to decipher a simple linear variable’s estimated effect and basically impossible to understand time interactions, interactions between variables, and nonlinear effects without the reader further calculating quantities of interest for a variety of fitted values.So, I’ve been putting together the simPH R p…

Slide: one function for lag/lead variables in data frames, including time-series cross-sectional data

I often want to quickly create a lag or lead variable in an R data frame. Sometimes I also want to create the lag or lead variable for different groups in a data frame, for example, if I want to lag GDP for each country in a data frame.I've found the various R methods for doing this hard to remember and usually need to look at old blogposts. Any time we find ourselves using the same series of codes over and over, it's probably time to put them into a function. So, I added a new command–slide–to the DataCombine R package (v0.1.5).Building on the shift function TszKin Julian posted on his blog, slide allows you to slide a variable up by any time unit to create a lead or down to create a lag. It returns the lag/lead variable to a new column in your data frame. It works with both data that has one observed unit and with time-series cross-sectional data.Note: your data needs to be in ascending time order with equally spaced time increments. For example 1995, 1996, 1997. ExamplesNot…

Do Political Scientists Care About Effect Sizes: Replication and Type M Errors

Reproducibility has come a long way in political science. Many major journals now require replication materials be made available either on their websites or some service such as the Dataverse Network. Most of the top journals in political science have formally committed to reproducible research best practices by signing up to the The (DA-RT) Data Access and Research Transparency Joint Statement.This is certainly progress. But what are political scientists actually supposed to do with this new information? Data and code availability does help avoid effort duplication--researchers don't need to gather data or program statistical procedures that have already been gathered or programmed. It promotes better research habits. It definitely provides ''procedural oversight''. We would be highly suspect of results from authors that were unable or unwilling to produce their code/data.However, there are lots of problems that data/code availability requirements do not address.…