If a major bank based in euroland, such as ING or Deutsche Bank, had liquidity problems, which central bank, if any, would help with temporary funding? Would it be the European Central Bank or one at the national level?
This question isn't resolved, and it is one that concerns an earnest group of academics calling itself the European Shadow Financial Regulatory Committee (ESFRC). The fact that there is no European financial regulatory committee to shadow doesn't deter them, in fact it spurs them on. They see a dangerous gap in coordination between the European Commission, the Basle Committee on Banking Supervision, national central banks and financial supervisors.
The 1992 Maastricht Treaty didn't even dare address the above question. Drafters were wary of giving any hint that the ECB is there to bail out errant banks or banking systems: that might have alienated German support for monetary union. The principle of...
