The European Central Bank After Bailout Essay

1667 Words Aug 13th, 2015 null Page
The European Central Bank after bailout these countries, introduced new standards and regulations. Besides bailing out these countries, the ECB to prevent a complete collapse of the banking system, committed 1.6 trillion euros, which the equivalent of 13 % of the EU’s annual GDP, to the banks (European Commission 2). This was done to protect bank runs and European savings. The ECB also set up financing facilities quickly for euro area countries experiencing severe financing problems (European Commission 2). For example, when Greece lost access to affordable financing in the market, the EU moved quickly to help Greece by pooling bilateral loans from European governments with the European Commission (European Commission 2). Then the EU preceded to set up two temporary funds, the European Financial Stabilization Mechanism (EFSM) and the European Financial Stability Facility (EFSF). These two funds had a total lending capacity of 500 billion euros (European Commission 2). This economic crisis has demonstrated that the EU’s banking system is vulnerable and needed reform. In response, the EU and ECB introduced economic reforms. First, 3 supervisory bodies were set up to help coordinate the work of regulators and make sure the EU rules were applied consistently everywhere (European Commission 3). The first body, the European Banking Authority (EBA), was form to deal with bank supervision, including the supervision of the recapitalization of banks. The second body, the European…

Related Documents