Samenvatting

There is currently no legal base for financial supervision and crisis management at the European level. Powers are nationally based. This article develops the financial trilemma, which states that a stable financial system, an integrated financial system and national financial autonomy are incompatible. Any two of the three objectives can be combined, but not all three; one has to give. Assuming that a stable financial system is desirable, this article explores the trade-off between national financial autonomy and financial integration in Europe. Policymakers face a clear choice. If they want to preserve the benefits of the single market for financial services (financial integration), financial supervision and crisis management have to be based on a European footing. This article stresses that a strong legal base is needed for such European arrangements. Voluntary cooperation does not work in a crisis, as national governments tend to follow their national interests. The alternative to European arrangements is preserving the current national powers. This article predicts that banking will then become national: each country has its own national banks.