About the Banking Union

This will be an article about the Banking Union in Europe, we need to understand the importance of this kind of laws in this field considerating it will lead us in the economic cycle. I cannot support the Banking Union, not in this terms, and I'm going to explain why.

At first, I would like to say it is important to remark something about efficients markets: they allow different business models so they can compete, the better model will grow and the bad one will disapear. The second thing about efficients markets is they have to give a good incentive for those who make good decisions and punish the bad ones (taking them out of the market).

The Banking Union will not give us any of both: at first, we are taking the most regulated market under the watch of the ECB, who decide the ratios of working to every bank along Europe, no matter their characteristics, their business model... It will lead to instability of some of the entities at first, but the worst thing is it will take to a unique business model, that will not make an efficient market. Besides, we should think who we will place on the top of this Union, the ECB does not really seem a good choice since in this financial (and mostly debt) crisis, has been the promoters of debt and financial irresponsability with their monetary expansion since the beggining of the Euro, as well, they have gone into a huge debt by itself since the beggining of the Euro.

Moreover, the Banking Union will not help to build a financial system with incentives, instead we will repeat the problem we had in this crisis: the socialisation of losses. The new mecanism called Bank Resolution Fund has an advantage, no more banks rescued with public money. But, from bank's point of view, it is the same situation, when they fall, someone is going to rescue them, and this time they will have to pay the same in any situation, no matter if they fall or not, because this Bank Resolution Funds is formed by bank's contributions, those contributions take the banks to an equality on results, what has a first consequence: non equality under the law. That is why the absence of responsability for the acts of the banks will continue and could be even increased. This takes me to the only point I agree, the bail-in for banks, although it is too moderated as the owners only pay for some liabilities, it is a beggining for a recover of the resposability and the incentives in banking.

Also, I would like to suggest that this regulation could had other points that could be more useful for investors and business in general, such as an armonization of the accounting plans of all the banks in the Euro.

I will say too, as a conclusion and a reminder: regulation, even if it is perfect, will never replace the need of a good financial culture in the society, so people know how to use their money as they like really.