The paper offers a critical assessment of the financial reforms adopted or proposed at the European level. The reshaping of the EU institutional architecture and the adoption of the new Basel 3 rules should reduce the national margins of discretion that have up to now characterised supervisory practices, often leading to light touch supervision, and restrain the growth of bankarisation, hence excessive systemic leveraging. However, the limitations of a purely prudential approach to regulation may not be overcome by setting up new institutions and make prudential requirements more stringent. In addition, given unavoidable national banking specificities, more severe rulebooks homogenously applied across the EU countries could further worsen the inconsistencies of a one-size-fits-all rule. The criticisms directed at the new regulatory framework assume particular relevance in the EU, whose peculiar construction requires that the financial sector should not be permitted to jeopardise its critical fiscal equilibrium. This opens the way to the adoption of structural measures, as the one presented by the Vickers Commission on ring-fencing. Looking at the financial system as a whole, we argue that even these measures do not offer effective protection for the economy and tax-payers, and that much more radical interventions are needed
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