There are expressions that repeatedly used become true metaphorical abuses, that is, they end up betraying their true meaning. The expression "systemic risk" runs the risk of becoming one of these, often being evoked inappropriately. For international supervisory bodies (BIS, ECB, etc.), systemic risk is the risk that the insolvency or bankruptcy of one or more intermediaries will lead to generalized insolvency phenomena or chain failures of other intermediaries. The highly interconnected banking and financial system is exposed to the negative effects of systemic risk.
Contagion and domino effects that determine the instability of intermediaries and markets usually follow an initial shock such as the bursting of a speculative bubble or the default of some large intermediary. It is therefore a negative impending event of great destructive events of the order of things, with very serious effects that cannot be measurable a priori on the welfare of the saver, which in the most extreme cases manifests itself with the run on bank branches. It is the monster to be fought, in the name of a general interest aimed at avoiding a crisis of trust among depositors, in defense of which public interventions, ie at the expense of taxpayers, are also justified. In Europe and in other countries, the years of the crisis have seen defaults of intermediaries capable of activating systemic effects, if not even of having been the cause of that crisis.
Here then are the 130 European banks, 15 of which are Italian, which have come under the control of the ECB, (the so-called Banking Union), which has also taken on the task of supervising, in the name of systemic risk, also payment systems and platforms settlement systems such as Target 2 and Target 2 Securities. We could be more precise, but it is enough for us to have given the idea, also recalling the responsibilities that remain in charge of the national supervisory bodies, from now on dedicated to the so-called less significant and therefore non-systemic banks.
Cooperative credit banks obviously all fall into this category. Well, from next January 20st, with the entry into force of the European legislation on crisis resolution and deposit guarantee schemes, it will no longer be possible to exclude atomistic liquidation, even for these intermediaries, precisely because of their systemic non-relevance. that is, bankruptcy, as ordinarily occurs for all companies. And this in contrast to what has been systematically avoided throughout its XNUMX-year history by the Guarantee Fund for Depositors.
In the event of a capital deficit, it will be necessary for this body to provide for the repayment of the protected depositors, to then divide among the other creditors what, if any, will remain from the liquidation of the assets. If not sufficient, the residual cost will be paid not only to the shareholders, but also to the bondholders and depositors with funds greater than 100.000 euros. The famous bail in, with consequences that are not yet entirely clear even among insiders. The burdensome and burdensome practice of sharing the costs of mismanagement among all the BCCs, in the name of cooperative solidarity, fearing reputational risks and even the spread of panic even on smaller markets will have to cease. Which, as you understand, can neither in principle nor in fact be attributable to systemic risk as defined above and applied in the Banking Union.
In truth, it was the Directorate-General for Competition of the European Commission that was the first to no longer accept this type of bailout, to which interventions of this kind are subjected to evaluate their impact on the principles of competition. It was categorically merciless, regarding them as state aid. Attempts by the Bank of Italy and the cooperative system to oppose these resolutions have so far been useless, to the point that the question has assumed political relevance, because being told by Europe that our practices amounted to public interventions is not it was certainly nice, but above all because such a system has relieved the top management of bank responsibility over time, preventing the formation of robust prevention policies. A concrete example of moral hazard, the costs of which have certainly subtracted huge resources from the strengthening and development of the movement. And all this not to mention the effects on competition, which is also protected on smaller banking markets to the advantage of the end user, due to the indiscriminate support provided to inefficient and therefore more costly intermediaries for everyone.
COMPETITION BY GROUP OR BETWEEN GROUPS: Hamletic dilemma of a reform
At this point it seems appropriate to return to a theme already covered on FIRSTonline on 21st October. That is to say on the competition that should miraculously develop between a plurality of joint cooperative groups, which, after the indications released by the Governor of the Bank of Italy at the ACRI headquarters, now seems to distinguish the scenario of the ongoing (self) reform of cooperative credit. And this not so much to reconfirm some perplexities about the functioning of a system in which multiplicity would respond on the one hand to the preservation of an ethnic banking moreover divided between two groupings present in a single Region such as Trentino Alto Adige, on the other other voluntary concentration initiatives with outlines that are not yet known.
The principles of competition are not preserved by admitting more subjects to a tender with rules yet to be built than by the competition between different industrial projects, assisted by adequate technical, financial and managerial resources, the result of complex and coherent investment plans. Such projects seem to be completely absent in most of the cooperative universe at the moment. In order to promote competition not so much between combinations within the same system as against systems external to it, it is necessary to develop, by integrating them, a new cooperative banking business and new implementation know-how.
Unfortunately, the information currently available does not seem to respond to either perspective. Above all, no one has so far tried to demonstrate the benefits to be paid to cooperative credit customers in terms of prices and quality of banking services as a consequence of a reform which, in order to be completed, is forced to split up the system with respect to its unity. Without prejudice to demonstrable cooperative entrepreneurial exceptions, this profile would undoubtedly seem more suitable for dealing with the numerous and significant criticalities that have led to this phase of necessary transformation.
