On Banks, Courts and International Law: A Critical Analysis of the Draft International Agreement on the Functioning of the Single Resolution Fund

Research output: Working paperResearchpeer-review

  • Federico Fabbrini
In December 2013 the ECOFIN Council has given its green light to the adoption of the second pillar of the so-called Banking Union: a Single Resolution Mechanism to wind down failing banks in the Euro-zone, and thus break the cycle between banks and sovereigns in the EU. Besides a regulation, to be adopted in co-decision procedure with the Parliament, the Council has however endorsed a plan to adopt an international agreement on the functioning of the Single Resolution Fund (SRF). The paper critically analyses the choice to resort to international law to establish the SRF. As the paper maintains, the use of an intergovernmental agreement in this case is not necessary from a legal point of view. In fact, the use of international law in this case rests on flawed legal argument, namely that EU regulations cannot impose financial obligations on the states. Moreover, as the paper explains, the use of international law generates bad policy outcomes. Resort to international law to establish the SRF opens the door for national courts’ review of the agreement – a prospect which contrasts with the constitutional logic of leaving decision of economic questions in the political process. In light of these weaknesses, the paper concludes that the European Parliament should endeavor to block the intergovernmental avenue and bring back the regulation of the SRF within the framework of EU law.
Original languageEnglish
PublisherCentro Studi sul Federalismo Research Paper
Pages1-18
Number of pages18
ISBN (Print)9788896871478
Publication statusPublished - Feb 2014

ID: 131446465