Europe Beyond the Euro: Building Protection for Europe’s Economies in the Time of Risks (St Antony's Series)

This book observes that a key determinant of Europe’s welfare over the coming decades will be how the region manages crises, both financial and societal. It examines how key institutional developments, such as Economic and Monetary Union, reflected differentiated integration (DI) in the EU, but argues that modern-day risks are highly interconnected, and their management therefore has to be inclusive. In that connection it looks in particular at the European Systemic Risk Board (ESRB), whose mandate to protect financial stability also gives it relevance with regard to other crises. The book considers that the strengthening of this institution, and bringing it to the fore, would help EU member states, as well as countries around the EU including applicant nations, to manage financial and societal risks, including COVID-19 and the transition to a green economy, thus safeguarding the economies of Europe. It builds on a model of the EU allowing for DI in some activities, while ensuring sound governance arrangements between those inside and those outside that activity, and embodying inclusivity in the fundamentals of the EU, including ​in the management of risk. Preface Acknowledgements Contents Abbreviations List of Figures List of Tables List of charts Chapter 1: Introduction The Study Europe Beyond the Euro The Concepts and the Differentiated Institutions The ESRB The Hybrid Treaty Change and Conclusions References Chapter 2: The EU in a Dangerous World: The Importance of Regional Economic Arrangements References Chapter 3: Not All Member States Are Created Equal The Core and the Periphery The Old and the New Beyond the EU Periphery: Those Staying, Those Coming, and Those Going Beyond the Member States: Beyond the Elites References Chapter 4: Treaties, Frameworks, and Powers The Treaties The Four Freedoms Equivalence Enhanced Cooperation “Muddling Through” Hard Power and Soft Power Majoritarianism Weaponization Neo-functionalism and Post-functionalism References Chapter 5: Economic and Monetary Union and Beyond: Differentiation in the EU Currency Union Concluding Observations Banking Union (BU): The Single Supervisory Mechanism (SSM) European Stability Mechanism (ESM) References Chapter 6: Non-treaty Relationships Across Core and Periphery and Beyond Borders and Cooperation Regional Arrangements: Nordic-Baltics2 Regional Arrangements: Others Vienna Initiative (VI)12 Fiscal Union Erasmus Programme Concluding Observations References Chapter 7: Response to the GFC: The European Supervisory Authorities The EU Financial Sector Regulatory Structure European Banking Authority (EBA) European Insurance and Occupational Pensions Authority (EIOPA) European Securities Market Authority (ESMA) References Chapter 8: The Macroprudential Approach: A Strategy for All Seasons? The Basis for Macroprudential Policies Carney’s Theory of Everything Macroprudential Policies at the ECB The Macroprudential Perspective Today: An Agenda Going Forward References Chapter 9: The European Systemic Risk Board: Financial Stability for the Entire Membership The Establishment of the European Systemic Risk Board (ESRB) The Operations of the ESRB The First ESRB Recommendations ESRB Warnings and Recommendations on Residential Real Estate (RRE) Real Estate Data Gaps Centralized Counterparty Clearing Houses (CCPs) Risks from Investment Funds Non-bank Financial Risk Monitor Dashboard Reciprocation Doom Loop ESRB Reports Powers and Position of the ESRB Conclusions References Chapter 10: The Covid-19 Pandemic, the Green Economy, and Financial Stability The Covid-19 Pandemic Green Economy Other Risks Managing Financial Crises, Pandemics, and Other Threats The Risks from Pandemics Coordination and Inclusivity Broadening the ESRB Remit Lessons and Proposals Concluding Observations References Chapter 11: Not All Member States Move Together: Differentiated Integration References Chapter 12: Inclusive and Differentiated: Building Back Safer The Ever-Closer Union Side-Stepping the Ever-Closer Union Side-Stepping: Moving Forward Voluntarily Twenty-First-Century Models Breugel: The Messy Rebuilding of Europe Questions over the Breugel Model Adding to the Superstructure The Two Pillars Resilience: Building Back Better? Towards a New Treaty? From Timber Frame to Steel Plating References Chapter 13: Conclusions Reference Postscript Appendixes Appendix 1: 2020 Conference: “Life outside the Euro—Monetary and financial issues for the EU periphery and beyond” Summary of Conference of the European Political Economy Project, St. Antony’s College, 23 January 20204 Joining the Banking Union? Vienna Initiative: Where Now? Joining the Euro? Macroprudential Frameworks Appendix 2: Statistics in the Time of Pandemics Appendix 3: The Bargains A Grand Bargain: The Most Important Dinner Party in History11 Two Hundred Years Later: A Smaller Bargain A European Bargain And a Forgotten Bargain Appendix 4: The Purple Economy: A “Cronin” Moment References Index This book observes that a key determinant of Europe's welfare over the coming decades will be how the region manages crises, both financial and societal. It examines how key institutional developments, such as Economic and Monetary Union, reflected differential integration (DI) in the EU, but argues that modern-day risks are highly interconnected, and their management therefore has to be inclusive. In that connection it looks in particular at the European Systemic Risk Board (ESRB), whose mandate to protect financial stability also gives it relevance with regard to other crises. The book considers that the strengthening of this institution, and bringing it to the fore, would help EU member states, as well as countries around the EU including applicant nations, to manage financial and societal risks, including COVID-19 and the transition to a green economy, thus safeguarding the economies of Europe. It builds on a model of the EU allowing for DI in some activities, while ensuring sound governance arrangements between those inside and those outside that activity, and embodying inclusivity in the fundamentals of the EU, including in the management of risk