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13 Oct 2011

The case for a euro-TARP

Karel Lannoo

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The European Union should move quickly to enact an American-style ‘TARP’ in the eurozone to strengthen the financial sector and maintain lending, argues CEPS CEO Karel Lannoo.
Through the European Financial Stability Facility, the EU now has the structure in place for a truly European support fund for the banking sector, which it did not have in 2008. It should take account of the lessons of the 2008 crisis and apply EU state aid rules. A eurozone recapitalisation fund would better limit distortions to the functioning of the single market than the current arrangement of ad hoc guarantees and support mechanisms.