(στην
Jessica Fino)
Debate:
should all banks be nationalised?
The nationalization of banks is like a two-edged
sword. On the one side, the state as an entrepreneur has been proved inefficient,
especially regarding the allocation of resources through the banking system.
Cases of state-owned banking have enhanced the explanatory power of the theory
of public choice. Furthermore, along with the inefficient allocation of
resource, state ownership and intervention contributes significantly to the
macroeconomic deterioration by fuelling fiscal expansion and
"breaking" the monetary transmission channels. Greece, with a long
state-led banking system until the mid-90s, was a typical case of an economy
that was harmed by the strong financial intervention. On the other side,
financial (ultra) liberalization may easily lead to a state of financial
euphoria that cannot be adequately followed by the state, as a result of the
inherent problem of time inconsistency between regulation/supervision and
financial modernization. In such an environment the "toxic" dimension
of a sophisticated and over-leveraged financial system may grow, creating the
field for a financial crisis. Thus, the state, along with its independent
agencies, must hold a regulatory and supervisory role, holding –in theory– the
card of (temporary) nationalization of banks only for times of strong financial
turmoil.
In this point, however, the policy-maker, along with the supervisor, must balance their "nationalization" intention between two tasks: to secure depositors' and investors' confidence in the financial system and to prevent the appearance of the moral hazard phenomenon. Also, they have to take into account the fiscal capacity of their economy and the inefficiencies of state intervention in the banking system. The best way to solve this difficult equation is through the establishment of an adequate framework that includes banking regulation, supervision, bail (in and out), resolution, and deposits' guarantee, without state's direct involvement. In such an adequate framework banks can efficiently function in an open market. Banking Union seems to be a good example, even though the pillar of deposit's guarantee must be further strengthened.
In this point, however, the policy-maker, along with the supervisor, must balance their "nationalization" intention between two tasks: to secure depositors' and investors' confidence in the financial system and to prevent the appearance of the moral hazard phenomenon. Also, they have to take into account the fiscal capacity of their economy and the inefficiencies of state intervention in the banking system. The best way to solve this difficult equation is through the establishment of an adequate framework that includes banking regulation, supervision, bail (in and out), resolution, and deposits' guarantee, without state's direct involvement. In such an adequate framework banks can efficiently function in an open market. Banking Union seems to be a good example, even though the pillar of deposit's guarantee must be further strengthened.
