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FINANSMARK-Finansmarkedet

Towards more stability, competitiveness and predictability in the financial sector

Alternative title: Towards more stability, competitiveness and predictability in the financial sector

Awarded: NOK 3.3 mill.

Project Number:

250219

Application Type:

Project Period:

2016 - 2020

Funding received from:

Location:

Subject Fields:

On 9 August 2017, the European Commission recalled that it is ten years since the start of the global financial crisis. The financial crisis that began in 2007/2008 led to the to the EU?s worst recession in its history. That was at least what one thought before the COVID-19m outbreak that led to an even bigger global crisis that costs both lives, health and the economic growth. The measures that were undertaken in order to address the financial crisis at the EU/EEA level provided a solid starting point that allows for dealing with the corona crisis. This is why this project and its results are very valuable to the current COVID-19 crisis. In 2007/2008 the unprecedented situation in the banking sector and the economies of the EU/EEA Member States required unprecedented actions by the EU/EEA institutions. In absence of a EU?s framework to deal with the financial and real economy crisis, the Commission and ESA was left with State aid rules. Those had to be used wisely to both save the financial sector and avoid undue competition distortions. The Commission triggered Article 107(3)(b) TFEU, a rarely used provision. Thus far, it adopted seven Crisis Communications that adjusted the European Commission?s answer to the global financial crisis in line with the changing situation in the market. The last set of guidelines was adopted in 2013 and marked a big change from ?bail-out? to ?bail-in? policy. Those guidelines provided a detailed guidance on the criteria for the compatibility assessment. The results of the application of the finance crisis regulations have been positive. This is showed by the State Aid Scoreboards, which are reports prepared by the European Commission on the basis of the data that had been delivered by the Member States. They show the amount of public financing that qualifies as State aid that had been used by the Member States and which public goals were pursued. The 2018 State Aid Scoreboard shows that the use of the financial crisis aid has decreased. Eurostat data also shows that most of such aid that had been granted is now paid back by the beneficiaries. This project resulted in a number of scientific articles and book chapters written by postdoctoral researcher Malgorzata Cyndecka who analysed different issues that are raised by the application of State aid law in the financial sector, in particular, the Market Economy Operator Test, a number of lectures and presentation she held in both Norwegian and English during national and international events, a number of media contributions such as articles, interviews, expert analyses, a podcast by ?Misjon Vestlandet? (PWC Bergen) in which she discussed the COVID-19 state aid measures in light of the financial crisis aid at the national and EU level, workshops with the Advisory Board and an international conference with experts in State aid, civil servants, and representatives of different organisations, seminars and guest lectures that Cyndecka arranged and participated in. The Law Faculty became known for its expertise in State aid law. Due to her publications and presentations Cyndecka bel invited to join the oldest and largest journal writing about State aid, European State Aid Law Quarterly, as Associate Editor. Hun ble også invitert til å skrive et bokkapittel State Aid in the Financial Sector as part of the second edition of the well-known Research Book on State Aid that will be published by Edward Elgar. Cyndecka was also invited to join the Young Academy of Norway https://akademietforyngreforskere.no/en/ and participated in the University of Bergen?s young research talents programme «Momentum».

When the 2008 financial crisis hit Europe, the most urgent challenge facing both the EU/EEA institutions and the Member States was the necessity of granting huge amounts of aid to banks that were "too big to fail". The prevailing objective to achieve was to prevent the systemic crisis. While the European Commission and the EFTA Surveillance Authority are still dealing with financial crisis aid cases on a daily basis, one must address a new, but equally pressing question of how competition rules and, in particular, State aid rules can contribute to rebuilding the financial sector for the future and make it more robust. This project aims to contribute to facing this new challenge by analysing how State aid rules should be applied in the financial sector to safeguard its efficiency, competitiveness and equal terms and conditions for all market operators. This contribution entails carrying out two individual research projects: a Post.doc.-project and a PhD project (self-financed by the applicant). The Post.doc.-project will investigate the applicability and application of the Market Economy Investor Principle (MEIP) to state measures granted in the financial sector. As explained in the project description below, the financial crisis has had a significant impact on the proper understanding of the MEIP. This requires examining how the use of the MEIP may and should contribute to rebuilding of the sector concerned. The PhD project seeks to clarify the legal implications of repayment of aid that was granted in the form of a state guarantee. The provision of aid in this form creates a special triangular relation between the state, the aid recipient and the financial institution. Such a unique constellation poses certain civil law challenges that require to be addressed. As the procedure of aid recovery is governed by national rules, this project will examine and clarify the implications of enforcing the EU/EEA system of State aid control to the Norwegian legal system.

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FINANSMARK-Finansmarkedet