How Should the European Banking Supervisory Authority Deal with Undercapitalised Banks?

Markus Demary, Institut der deutschen Wirtschaft Köln, argues in favour of a two-step introduction of a banking union for sufficiently capitalised and under-capitalised banks respectively. The latter should submit restructuring plans to the ECB that would be subject to its approval. Should a bank fail to meet the ECB’s requirements, it should be wound up using national liquidation funds.