Impediments to resolvability. What is the status quo? December 2019

The feasibility and credibility of bank resolutions depends, among others, on whether the impediments to resolvability are addressed or removed. Based on the limited public information available, this paper assesses the current state of the identification and removal of impediments to the resolvability of banks under the remit of the Single Resolution Board (SRB). The main findings suggest that the inclusion of the impediments assessment is taking the SRB more time than originally foreseen, there is a greater dependence on banks to address or remove impediments and that the non-resolvable banks are not notified to the EBA. This document was provided by the Economic Governance Support Unit at the request of the ECON Committee

The impact of EU price rules: Interchange fee regulation in retail payments. CEPS-ECRI Working Paper 4 February 2020

Debit and credit cards have gradually increased in importance as instruments for retail payments. This has prompted anti-trust authorities at both national and European levels to investigate and limit the interchange fee-based revenue model of four-party schemes. These moves were followed in 2015 by the introduction of the Interchange Fee Regulation (IFR), which introduced price rules to nurture a competitive, innovative and secure payments environment for all stakeholders. The IFR caps the interchange fees on consumer debit and credit cards and prohibits restrictions on co-badging and certain requirements to honour all cards for merchants. This paper assesses the impact of the IFR. Based on a literature review and data analysis, it concludes that the IFR has led to a drop in interchange fees – in some cases below the maximum defined in the legislation in all EU member states. The decrease in the interchange fee is largely reflected in lower charges for merchants, although the reduction is – at least partially – offset by higher scheme fees charged by international four-party card schemes and by higher fees for cardholders. The policy recommendations aim to increase transparency for a fuller understanding of the functioning of the market and to enhance competitiveness in both the market for card payments and other payment instruments

Employment and Working Conditions of Selected Types of Platform Work

Platform work is a form of employment that uses an online platform to match the supply of and demand for paid labour. In Europe, platform work is still small in scale but is rapidly developing. The types of work offered through platforms are ever-increasing, as are the challenges for existing regulatory frameworks. This report explores the working and employment conditions of three of the most common types of platform work in Europe. For each of these types, Eurofound assesses the physical and social environment, autonomy, employment status and access to social protection, and earnings and taxation based on interviews with platform workers. A comparative analysis of the regulatory frameworks applying to platform work in 18 EU Member States accompanies this review. This looks into workers’ employment status, the formal relationships between clients, workers and platforms, and the organisation and representation of workers and platforms

State space description of national economies: the V4 countries

We present a new approach to description of national economies. For this we use the state space viewpoint, which is used mostly in the theory of dynamical systems and in the control theory. Gross domestic product, inflation, and unemployment rates are taken as state variables. We demonstrate that for the considered period of time the phase trajectory of each of the V4 countries (Slovak Republic, Czech Republic, Hungary, and Poland) lies approximately in one plane, so that the economic development of each country can be assocated with a corresponding plane in the state space. The suggested approach opens a way to a new set of economic indicators (for example, normal vectors of national economies, various plane slopes, 2D angles between the planes corresponding to different economies, etc.). The tool used for computations is orthogonal regression (alias orthogonal distance regression, alias total least squares method), and we also give general arguments for using orthogonal regression instead of the classical regression based on the least squares method. A MATLAB routine for fitting 3D data to lines and planes in 3D is provided.Comment: 13 pages, 18 figure

The EBA EU-wide Stress Test 2016: Deciphering the black box. CEPS Policy Brief No. 346, August 2016

The results of the European Banking Authority’s (EBA) stress test, administered to banks across the EU and published at the end of July 2016, revealed some large differences across banks. Our analysis of the results for the 51 banking groups suggests that not economic growth but rather the exposures to non-performing loans (NPLs) and to governments and corporates seem to be the main drivers behind the impact of the adverse scenario. This implies that the stress tests are primarily responding to the risks that have already materialised. They are therefore useful for understanding the implications of the currently identified risks, but they do not necessarily give insights into the fundamental soundness of the European banking sector. Policy Recommendation If well-executed, the stress test can be a useful tool for acquiring a better understanding of the implications of the current issues facing European banks. It does not, however, give insights into the fundamental soundness of the European banking sector, which is widely considered to be one of the main objectives of the stress test. To obtain such insights, a more intriguing exercise with a longer horizon (say, five or ten years instead of three) and multiple scenarios would be recommended

The provision of critical functions at global, national or regional level. Is there a need for further legal/regulatory clarification if liquidation is the default option for failing banks? CEPS Special Report, 19 December 2017

The introduction of a bank resolution framework for EU banks has created the need for clear legal definitions of the main elements in resolution. This paper assesses one of these elements, namely “critical functions”, which encompasses the activities of a bank that are of significant importance for the real economy. The assessment of the regulation and implementation shows that there is room for sharpening the definition and equal application across all banks. It is questionable, however, whether regulatory intervention is necessary given the on-going work of authorities at different levels. In turn, legislative intervention will be required to align the objectives of the resolution framework and state aid. The latter currently leaves more room for public support measures, which are not necessarily in the public interest