NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Can the European Community Afford to Neglect the Need for More Accountable Safety-Net Management?

Edward J. Kane

NBER Working Paper No. 11860
Issued in December 2005
NBER Program(s):   CF

As financial institutions and markets transact more and more cross-border business, gaps and flaws in national safety nets become more consequential. Because citizens of host (home) countries may be made to pay for mistakes made in the home (host) country, Basel's lead-regulator paradigm violates the principle of democratic accountability. Because important differences exist in policymaking authority, instruments, and goals, banking supervisors need to improve their ability to monitor and mitigate the consequences of defects in one another's performance. A straightforward way to enhance both capacities would be to establish opportunities for public trading in debt obligations and reinsurance derivatives issued by country-level deposit-insurance entities.

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Document Object Identifier (DOI): 10.3386/w11860

Published: Kane, Edward J. "Can the European Community Afford to Neglect the Need for More Accountable Safety-Net Management?" Atlantic Economic Journal 34, 127-144. 2006.

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