Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

intensification of the crisis in the wake of additional massive losses by
banks, which led to the design of asset relief schemes (e.g. “bad banks”)
with large budgetary repercussions, has led to further coordination on
how to design such a scheme.
Markets call for a coordinated macro-response
The financial markets continue to call for a pan-European response to
economic and market developments. The co-movement of share prices
and interconnectedness of financial sectors as well as the synchronisation
of business cycles are evident facts which lead market participants,
analysts, observers, and the media to view purely national solutions as
suboptimal, and pan-European policy responses as superior outcomes.
After the announcement of the Paulson Plan in the US, the markets called
for a “European” rescue plan, thereby de facto treating the EU – or, at any
rate, at least the euro area – from the perspective of market expectations,
as a political entity that should be capable of decisive and unified action in
ways comparable to a nation-state.
Crisis resolution measures
require further coordination
The follow-up to the coordinated response to the crisis – notably the
measures necessary to implement the decisions of the Paris Summit,
require a similarly coordinated response at the EU level to sustain a
level playing field. Certain aspects of the national rescue packages, like
the pricing of government guarantees for banks’ new debt issuance
or the features – and especially the pricing – of national governments’
recapitalisation measures for their own troubled institutions call at
least for common guiding principles in order to avoid distortions to
competition or other detrimental effects on financial stability which are
easily felt across national borders. At the same time, there seems to be a
permanently increased willingness to supply coordinated responses.
Acceptance of the joint management
of the consequences of the crisis
It could be argued that the acceptance of the purely functional argument
about exchanging more information concerning the economic and financial
situation in the various Member States – in view of their manifest or
expected cross-border impact – has created a new culture of cooperation,
in which certain ideas for common action which previously would have
been complete taboos, like a EU-wide fiscal stimulus package, or summit
meetings of euro area Heads of State or Government, increasingly become
acceptable, or at least joined the mainstream discourse about economic
Chapter 3 – Gabriel Glöckler 53