EU financial reforms: an unfinished business

The author argues that EU financial reforms since 2008 are a cyclical response to public anger rather than a structural paradigm shift. While the CRDIV package, the Single Supervisory Mechanism (SSM), and the Bank Recovery and Resolution Directive (BRRD) represent progress, the document highlights critical gaps: the lack of a binding leverage ratio, insufficient transparency and accountability for the European Central Bank, and loopholes allowing 'preventive' public recapitalisation of banks. Regarding derivatives, the author contends that the EMIR and MiFID II frameworks may be counterproductive, potentially creating new 'too big to fail' risks through central counterparties and failing to effectively limit speculation in commodity markets. The paper concludes that the EU relies too heavily on transparency and needs a radical shift toward simpler, more stringent rules, such as the mandatory separation of high-risk banking activities.

• EU financial reforms since 2008 were driven primarily by the high cost of the financial crisis to taxpayers, with Member States providing 591.9 billion in capital support between October 2008 and 31 December 2012, and guarantee measures peaking at 906 billion in 2009.
• The CRDIV package (April 2013) introduced bank capital standards, capped bonuses at twice the salary, and added capital requirements for 'too big to fail' banks, but it failed to include a binding leverage ratio or strong enough liquidity rules to limit reliance on unstable funding.
• The Single Supervisory Mechanism (SSM), effective November 2014, grants the European Central Bank (ECB) supervision of around 130 'significant' banks in the Eurozone, but the author argues it lacks accountability and provides the European Parliament with insufficient access to board minutes.
• The Bank Recovery and Resolution Directive (BRRD) aims to protect taxpayers by making shareholders and creditors responsible for losses up to 8% of total assets, yet it contains a loophole allowing Member States to use public funds for 'preventive' recapitalisation.
• The EMIR agreement (February 2012) requires most over-the-counter (OTC) derivatives to be cleared through central counterparties (CCPs), which the author suggests may increase risk concentrations and create a new 'too big to fail' hub-and-spoke system.
• MiFID II introduced Organised Trading Facilities (OTFs) for OTC derivatives and position reporting for commodity derivatives to limit speculation, but the author warns that national-level limits on positions could lead to a 'race to the bottom'.
• The author concludes that EU policy is overly reliant on transparency based on neoclassical economics and recommends a shift toward simple, non-risk-sensitive rules, including the mandatory separation of high-risk trading activities from essential banking.

APA

Denis, G. (2014). EU financial reforms: an unfinished business. Green European Journal. https://www.greeneuropeanjournal.eu/eu-financial-reforms-an-unfinished-business/

Chicago

Denis, Gaspard. EU financial reforms: an unfinished business. Green European Journal, 2014. https://www.greeneuropeanjournal.eu/eu-financial-reforms-an-unfinished-business/.

Wikipedia

{{cite report |last1=Denis |first1=Gaspard |title=EU financial reforms: an unfinished business |publisher=Green European Journal |date=1 January 2014 |url=https://www.greeneuropeanjournal.eu/eu-financial-reforms-an-unfinished-business/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{denis2014financial, author = {Denis, Gaspard}, title = {{EU financial reforms: an unfinished business}}, institution = {Green European Journal}, year = {2014}, month = jan, url = {https://www.greeneuropeanjournal.eu/eu-financial-reforms-an-unfinished-business/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }