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Law and Economics Yearly Review Volume 4 – Part 2 – 2015 ISSN 2050-9014 ISSUES ON FINANCIAL LAW AND MARKET REGULATION, ECONOMICS BUSINESS DEVELOPMENT AND YEARLY GOVERNMENT’S POLICIES ON REVIEW GLOBALIZATION Editors F. CAPRIGLIONE – R. M. LASTRA – R. MCCORMICK C. PAULUS – L. REICHLIN – M. SAKURAMOTO in association with LAW AND ECONOMICS YEARLY REVIEW www.laweconomicsyearlyreview.org.uk Mission The “Law and Economics Yearly Review” is an academic journal to promote a legal and eco- nomic debate. It is published twice annually (Part I and Part II), by the Fondazione Gerardo Capriglione Onlus (an organization aimed to promote and develop the research activity on fi- nancial regulation) in association with Queen Mary University of London. The journal faces questions about development issues and other several matters related to the international con- text, originated by globalization. Delays in political actions, limits of certain Government’s policies, business development constraints and the “sovereign debt crisis” are some aims of our studies. The global financial and economic crisis is analysed in its controversial perspectives; the same approach qualifies the research of possible remedies to override this period of progressive capitalism’s turbulences and to promote a sustainable retrieval. Address Fondazione Gerardo Capriglione Onlus c/o Centre for Commercial Law Studies Queen Mary, University of London 67-69 Lincoln’s Inn Fields London, WC2A 3JB United Kingdom Main Contact Fondazione G. Capriglione Onlus - [email protected] Editor‐ in‐ Chief F. Capriglione Editorial Board G. Alpa - M. Andenas - A. Antonucci - R. Olivares-Caminal - G. Conte - M. De Marco - M. Hirano - I. MacNeil - M. Martinez - M. Pellegrini - C. Schmid - M. Sepe - A. Steinhouse - V. Troiano - V. Uskov Editorial Advisory Board F. Buonocore - N. Casalino - A. Miglionico - D. Siclari - I. Kokkoris ISSN 2050‐ 9014 Review Process 1. Articles and case notes submitted to the Review will be reviewed by at least two reviewers (chosen among the Editorial Board members) and, where necessary, by an external advisor. 2. Any paper will be submitted by the Editorial Board – anonymously, together with an evaluation form – to the reviewers for an overall assessment. 3. In case of a single negative evaluation by one of the reviewers, the Editor-in-chief may assume the responsibility to publish the paper having regard to highlight this circumstance. 4. In any case, the submission of the paper or its positive evaluation does not provide any right to the author to ask for the publication of the paper. Fondazione Gerardo Capriglione Onlus may reproduce articles published in this Review in any form and in any other publications. CONTENTS The Capital Markets Union and the elusive goal of a ‛genuine’ Economic and Monetary Union........................................................................................................... 215 Rainer Masera Risk, regulation, supervision and crises in the European banking union.............. 236 Fabiano Colombini Creative austerity.........................................................................................................274 Giuseppe Di Taranto - Sabina Smailovic Which democratic oversight on the Banking Union? The role of the Euro-national parliamentary system.................................................................................................. 289 Nicola Lupo - Renato Ibrido The Danish No to EU Justice and Home Affairs opt-in. The reasons behind........ 323 Thomas E. Jorgensen - Alessandra Chirico FOCUS ON GLOBAL PERSPECTIVES Bridging spending review and change management in Italian public administrations.............................................................................................................337 Vincenza Esposito - Riccardo Mercurio - Marcello Martinez - Mario Pezzillo Iacono - Ernesto De Nito Central Banks’ Monetary Policy Study..................................................................... 352 Galina Gospodarchuk - Sergey Gospodarchuk The fight against fraud: a critical review and comparative analysis of the Labour and Conservative government’s anti-fraud policies in the United Kingdom.........369 Umut Turksen - Nicholas Ryder The Capital Markets Union and the elusive goal of a ‛genuine’ Economic and Monetary Union Rainer Masera* ABSTRACT: The objective of a European EMU of stable prices, open markets, shared prosperity, employment and sustainable growth was defined in a Summit meeting of 1969, and has been actively pursued as a primary goal of the Union over since. Significant results have been achieved, but the 5 Presidents’ Report (5PR) of June 2015 frankly admits that a ‛genuine’ EMU remains an unaccomplished endeavour: divergences create fragilities for the whole Union which must be rapidly corrected. A critical analysis of the results so far recorded in the euro zone comes also from other recent documents of the ECB and the IMF. The 5 Presidents indicate a roadmap covering the next decade to ensure a genuine EMU: they argue that progress must be simultaneously made towards economic, financial, fiscal and political union. All Unions are mutually interdependent and must develop in parallel. Financial Union, which comprises the launching and achievement of a Capital Markets Union (CMU), receives specific attention. The aim of this paper is to offer a critical assessment of the Report, in the analytical framework of a system-wide perspective on financial and economic stability offered by the macro prudential policy approach. Purposely, the quantitative evidence presented to illustrate the shortcomings of the EMU building process so far comes exclusively from official documents/papers of the ECB, the EC and the IMF. The “traverse” to the 4-Union EMU is especially complex partly because it goes beyond economic analysis and policy. The crucial role of CMU requires clarification, also in terms of the legal approach to be adopted. More generally, the intertwining of economic policies and the role of fallacies of composition/division must be analytically developed. The 5PR *Dean of the School of Business, Università degli Studi Guglielmo Marconi, Rome. E-mail: [email protected]. The author is grateful to two anonymous referees for very helpful comments on the first draft of the paper. 215 requires detailed specification of these medium-term processes to become operational and to achieve its declared goals. Key words: Economic and Monetary Union, Banking Union, Capital Markets Union JEL classification numbers: E60, G01, E44, E51 SUMMARY: 1. Introduction. - 2. The unsatisfactory economic record of the euro zone. 3. - The 5PR pro- posals to ensure a ‛genuine’ EMU. - 4. The key role of the Financial and Capital Markets Unions (CMU) and the issue of the right approach: law changes (5PR) or bottom-up model (Commissioner Hill)? - 5. Conclu- sions. 1. The objective of a European EMU of stable prices, open markets, shared prosperity, employment, innovation and sustainable growth has been advocated and actively pursued for a long period. The official approach to EMU dates back to the Summit Meeting in the Hague in 1969. The Monetary Union was achieved at the end of last century, after the signing of two Treaties with a strong economic and fiscal content (Maastricht, 1992 and Amsterdam, 1997). The thirty years between 1969 and 1999 cover what I call here Phase 1 of EMU (Appendix 1). The following fifteen years (2000-June 2015) span Phase 2, which refers to the operation and workings of the independent monetary policy of the ECB, the signing of many Pacts of economic nature, the build-up of the Great Financial Crisis (2007-2009) and a subsequent repair and recovery period, notably with the creation of the Banking Union (BU) (2013). Much has been achieved and major difficulties were overcome during the past half century. But the track record, especially in Phase 2, makes it legitimate to ask whether the policies adopted, in particular during the operation of the euro, have been appropriate and, if not, what changes are required. In any event, the task of ensuring a true and genuine economic union overcoming the difficulties of monetary unification in a non- optimal currency area has not been accomplished. This strong proposition is, somewhat paradoxically, a conclusion which can be found in an official, highly important document of the EU: the “Five Presidents’ Report” (5PR) of June 2015 (Juncker et al., 2015). This paper 216 frankly recognises that the euro area, as of today, does not represent a genuine EMU, fulfilling the aspirations and expectations repeatedly expressed, since 1969, by the Council, the Commission and the European Parliament: «Europe’s Economic and Monetary Union (EMU) today is like a house that was built over decades but only partially finished. When the storm hit, its walls and roof had to be stabilised quickly. It is now high time to reinforce its foundations and turn it into what EMU was meant to be: a place of prosperity based on balanced economic growth and price stability, a competitive social market economy, aiming at full employment and social progress. To achieve this, we will need to take further steps to complete EMU» (Juncker et al., 2015 p.4). 2. An open admission of the lack of overall success of the euro area economic policies, after the creation of the common currency and, even more, after the Great Financial Crisis, comes from a EU official. Peter Praet, member of the Executive Board and Chief Economist of the ECB, recently produced quantitative evidence in this regard –
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