The EU banking system, as we have discussed, is facing a perfect storm. The sector faces unprecedented challenges and is in the midst of large scale changes facing grave uncertainties. At the same time, the European Commission has suddenly turned a rather old idea of a Banking Union into the new buzzword. As our new series on financial regulation comes online and we discuss the Banking Union proposals in the coming days, it is very useful to take a step back and reflect what banking is all about anyway.
It was while thinking this through that we found a forgotten concept paper on 'what a good banking system looks like' that we had first published in late 2009/early 2010. This concept paper highlights all of the most important issues in banking and what needs to be done to make it better serve the real economy and is a very useful read for experts and non-experts alike. We have reproduced it in full below, but it can also be downloaded in a pdf format here.