In a Briefing Paper for ECON's Monetary Dialogue, Whelan observes that the ECB's new role of banking supervisor for the euro area greatly complicates the work of the organisation, both in terms of its internal structures and its relationships with various other organisations.
In this paper, Whelan reviews the arguments relating to synergies and conflicts of interest between monetary policy and bank supervision. He argues that the synergies are much more important than the conflicts of interest. While the new structures proposed for bank supervision at the ECB are cumbersome and somewhat unnecessary, they should still allow for important synergies in the coming years.
The ECB will need to hit the ground running in its supervisory role and coordinate fully with national governments and the ESRB to make the upcoming stress tests a success. One task the ECB should give up, however, is designing and monitoring structural adjustment programmes.
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