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Balancing market liquidity: Bank Structural Reform caught between growth and stability

Abstract : The European Commission’s proposal for a Bank Structural Reform (BSR) aimed at increasing banks’ resolvability through separating risky trading activities from deposit-taking institutions. In contrast to initial plans, the final proposal exempted market-making activities of banks. This exemption, we argue, was brought about by the Commission’s discursive framing of the BSR as a balancing act between stability and growth. Coupled with the incapacity to unambiguously measure the effects of the reform on market liquidity and on growth, this pushed the assessment of market-making from the technical to the political realm, leading to a reproduction of the prevalent market-based banking system.
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Submitted on : Monday, July 15, 2019 - 6:02:14 PM
Last modification on : Friday, July 2, 2021 - 1:59:53 PM

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Vanessa Endrejata, Matthias Thiemann. Balancing market liquidity: Bank Structural Reform caught between growth and stability. Journal of Economic Policy Reform, 2018, pp.Online. ⟨hal-02184088⟩

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