PREREQUISITES AND KEY PROVISIONS OF THE EU’S BANKING REGULATION REFORM

Introduction. The article deals with the reform of the banking regulation in the European Union.

Materials and Methods. The author made a theoretical and empirical analysis of the main sources of International and European law, the jurisprudence of the European Court of Justice, the studies of domestic and foreign scholars, analytical documents of the EU institutions and bodies and International organizations.

Results. It is proven in the article that the reform of the legal regulation of banking sector in the European Union was aimed at deepening the integration process in the European region. The reform was supposed to implement the European Banking Union project, which is based on 3 mechanisms Single Supervisory Mechanism, Single Resolution Mechanism and European deposit insurance scheme. These mechanisms are enshrined in the Single Rule-book for financial services that is a comprehensive document that regulates the whole process of centralization of banking supervision, crisis management and the protection of depositors. This legal act includes a regulation, the directives and guidelines for their implementation in National legislation.

Discussion and Conclusions. The main reason for the revision of the banking regulation in the European Union was the inefficiency of the existing mechanisms of resolving crisis situations, especially after the global financial and economic crisis  of  2008-2009, which  quickly gained a systemic character and became the largest in history. The emergency measures of financial support in this situation did not have the desired effect and the financial and banking crisis has continued by inertia to gain momentum. It affected the real sector of the economy and marked the beginning of a long and protracted recession with high unemployment and social upheaval in a number of European countries. The leadership of the European Union was forced to change the approach to the problem in connection with the onset of the second wave of the crisis in the summer of 2011, when a vicious circle of sovereign and banking risks explicitly manifested itself. The President of the European Council Herman van Rompuy was the first who said about the need for the reform in June 2012. He outlined in his report the main directions of the reform and called for the creation of a genuine Economic and Monetary Union. The reform of the EU banking sector was intended to create a European Banking Union and aimed at improving prudential regulation and banking supervision with the purpose of preventing crises and finding the most effective ways of managing banking crises.

1. Official website of the European Banking Authority. URL: http://www.eba.europa.eu.

2. Official website of the Single Resolution Board. URL: https://srb.europa.eu.

3. Byrne J., O’Connor T. Creditor rights, culture and dividend payout policy. Journal of multinational financial management. 2017. Vol. 39.

4. Communication from the Comission to the European Parliament and the Council «A Roadmap towards a Banking Union». URL: http://eur-lex.europa.eu.

5. Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC. Official Journal L 176, 27.6.2013.

6. Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/ EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council Text with EEA relevancE. Official Journal L 173, 12.6.2014.

7. Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes Text with EEA relevancE. Official Journal L 173, 12.6.2014.

8. Herman Van Rompuy, Report by President of the European Council «Towards a genuine economic and monetary union» (Brussels, 26 June 2012). URL: http://www.consilium.europa.eu.

9. Hirsch W. Law and Economics. 3rd Ed. Academic Press, 1999.

10. Niinimaki J.-P. Spatial competition in the banking system: Alternative lending technologies and collateral assets. Journal of multinational financial management. 2016. Vol. 35.

11. Polinsky M., Shavell S. Handbook of law and economics. Vol. 2, 1st Ed. North Holland, 2007.

12. Xafa M. European Banking Union, Three years on. CIGI Papers, Ontario, 2015. Vol. 73. URL: https://www.cigionline.org.