Dissertations / Theses on the topic 'Deposits Schemes'

We present three chapters on theoretical issues of banking. These deal with bank runs, risk sharing, lending and profitability. In the first chapter, we examine the agency problem in the bank-depositor relationship. Depositors are the principals and banks are the agents. Banks choose investment portfolios and are subject to moral hazard in that they have incentive to take on more risk than desirable to depositors because they are residual claimants. We study an incentive-compatible mechanism that prompts banks to follow a safe investment policy. This mechanism leaves the bank a profit margin in a similar manner to a CEO being paid a bonus by a company. In the second chapter, we extend Allen and Gale (1998) by adding a long-term riskless investment opportunity to the original portfolio of a short-term liquid asset and a long-term risky illiquid asset. Through portfolio diversification, we identify the risk-sharing deposit contract in a three-period model that maximizes the ex-ante expected utility of depositors. Unlike Allen and Gale, there are no information-based bank runs in equilibrium. In addition, our model can improve consumers' welfare over the Allen and Gale model. I also show that the bank will choose to liquidate the cheaper investments, in terms of the gain-loss ratios for the two types of existing long-term assets, when there is liquidity shortage in some cases. Such a policy reduces the liquidation cost and enables the bank to meet the outstanding liability to depositors without large liquidation losses. In the third chapter, we study the role of banks in providing loans to borrower firms. This paper extends the theory of designing optimal loan contracts (for profits) in the Bolton and Scharfstein (1996) model to a setting where asymmetry of information exists. Based on the verifiability of information structure, we analyze complete and incomplete contracts. Through this analysis, optimal, incentive-compatible loan contracts that maximize the expected profit of the bank are characterized. Our analysis suggests that a bank could be induced to liquidate a borrower's project under specific conditions. Furthermore, we identify implementable mechanisms for the renegotiation game given the bargaining power between a borrower and a bank.

Cielom diplomovej prace je vytvorenie expertného systému založeného na modeloch fuzzy logiky v programoch Excel a MATLAB, pomocou ktorého je možné ohodnotiť rôzne dôchodkové fondy a ďalšie finančné produkty. Vzhľadom na prehlbujúcu sa demografickú krízu, práca ponúka návrhy optimálneho investičného mixu pre tri modelové situácie s cieľom dodatočného finančného zabezpečenia počas dôchodkového veku. Práca je spracovaná pre podmienky Slovenskej republiky, podľa súčasnej situácie a platnej legislatívy.

The aim of the thesis "Banking union" is to analyze and describe the concept of banking union, with respect to development and harmonization of rules before crisis. In addition to description of 4 pillars of Banking union the thesis tries to reveal the risks connected with rules harmonization and power centralization in hands of ECB. The obligatory membership is conditioned by common currency Euro, therefore there is an opportunity to analyze the potential benefits for states with own currency. This will be done in separate chapter 4th using Czech Republic as example. Thesis will be also enriched with opinion of politics and economist to which own authors comment will be added.

碩士<br>東吳大學<br>法律學系<br>105<br>This paper relates “ how to protect depositors more effectively than the enforcement of financial safety net ”. The existence of “information asymmetry ” poses important problems for the depositors to supervise bank managers’ action, since the bank managers are easy to perform some act which breach the duty of loyalty, and that action are hard to be detected. Also, the Deposit Insurance System also brings some Moral Hazards. On the one hand, depositors would rely the existence of financial safety net, and ignore the duty to supervise. On the other hand, the bank manager would prefer to perform some risky strategy in managing the bank other than the low risk one. If it works, the bank will earn. However, if it fails, the depositor loses. The existence of financial safety net could provide part protection effectiveness, but it barely solve the problem of agency theory. A well-designed Deposit Insurance System not only provide the protection of depositor, also maintain the stability of banking system. Nevertheless, the Deposit Insurance System could bring some problem as well, such as moral hazard and adverse option. Thus, how to avoid those situation is another important issue. In a market where the market statistic is used to decide the quality of merchandise, the market mechanism would accurate the price of goods. However, if it’s not easy for the customers to get the merchandise information, there would be a lemon market. Thus, information disclosure would be an important mechnism to achieve bank transparency. It should be perceived that in talking about information disclosure, how do an unsophisticated person use the professional insider information effectively is also an issue. Therefore, the two tier information disclosure mechanism is a method to illustrate and develop these thoughts. It should be emphasized that these information intermediaries is chosen for its concreteness , ease in understanding and for its realism.

As the pressure that individuals exert on the environment is growing, there is an urgent need for action to revert the damage. Waste management is paramount for the ecosystem’s preservation and recycling represents a step towards the solution. With Portugal falling behind on the packaging waste targets defined by the European Union, there is a critical need to take additional measures to incentivize individuals to recycle. This dissertation aims at identifying the main factors that propel individuals’ recycling intentions and understand if Deposit-Return Schemes represent the needed incentive to increase them. Thereafter, to assess recycling intentions, this study applies the Theory of Planned Behavior enriched with contributions from the Model of Altruistic Behavior. The data collection method employed consisted of an online questionnaire where respondents were exposed to one of two recycling systems: The Deposit-Return Scheme and the Current Recycling System. The results obtained showed that individuals’ intention to recycle is lower through the Deposit-Return Scheme than through the Current Recycling System. This outcome is strongly impacted by the perceived inconvenience and difficulty of going throw with this new procedure. Findings also confirmed the literature that the decision of individuals to recycle is founded on the belief that is the right thing to do for the collective, and not on a conscious evaluation of the personal costs and benefits involved.

碩士<br>國立中央大學<br>產業經濟研究所<br>94<br>For the purposes of promoting banks in Taiwan and in Mainland-China being safely and soundly operated and improving the stability of banking system in both territories, construction of a finance safety net and its excution are a major policy of government performance. Deposit insurance scheme is an important element in the financial safety net and has been chosen and studied as a main subject in this thesis. Methods of study include literature review and case analysis. Discussion on the possible negative phenomena due to the implementation of deposit insurance scheme is made. The characteristics of a sound deposit insurance scheme and the principles of bank-failure resolution are delineated. Then, suggestions from international finance organizations on deposit insurance scheme and bank-failure resolution are collected and analyzed. The present operational situation of deposit insurance scheme and measures of resolving problematic banks in Taiwan and in Mainland-China are studied. The shortcomings of the present scheme operated in Mainland-China and differences of the scheme between Taiwan and Mainland-China are compared. Finally, suggestions on establishment, implementation and adjustment for the respective scheme excuted in Taiwan and in Mainland-China will be made. Research background, motive, goal, and research method and steps have been outlined in the 1st chapter in this thesis. In the 2nd chapter, elements of a finance safety net, the system of finance supervision and of the lender of last resort in Taiwan and in Mainland-China have been introduced. Suggestions regarding to the deposit insurance scheme and the bank-failure resolution from international finance organizations are described in the 3rd chapter in order to study the negative phenomena including adverse selection, moral hazard, and agency problems due to the execution of deposit insurance scheme. The characteristics of a sound deposit insurance scheme and the principles of bank-failure resolution are also discussed. The present operational situation of a deposit insurance scheme, the measures used for resolving a problematic bank in Taiwan and in Mainland-China, and the shortcomings of the scheme in Mainland-China and differences of the scheme in Taiwan and that in Mainland-China have been illustrated in the 4th chapter. In the 5th chapter, suggestions on the establishment, implementation and adjustment of the scheme in Taiwan and in Mainland-China have been made as the conclusions of this thesis. Suggestions for improving the scheme in Taiwan are made with reference to that in US. In the last chapter, further researches related to the topics studied have been suggested. Conclusions in this thesis are: 1. Suggestions for adjusting the deposit insurance scheme in Taiwan (1.1) Central Deposit Insurance Corporation (CDIC) should be conducted as a limited liability company, and manifest to public interest, independence, specialty, and exclude regulations which disaccord with the established goal of the scheme and the duty of CDIC, (1.2) CDIC should be authorized with a right to inspect insured institutes, to take disciplinary action against these institutes, to upgrade measures to resolve problematic banks chosen by CDIC, and to take essential measures. The personnel in CDIC should be authorized to exempt from lawsuit and responsibility of compensation. Prompt corrective actions and a mechanism of bridge bank should be introduced and excuted by CDIC, (1.3) Viewing on the influence of financial holding company (FHC) on the risk raised from CDIC’s insurance of banks, the situation that FHC’s business and financial connections are closely related with banking subsidiary should be anticipated and, thus, FHC should allow to receive the financial assistance, (1.4) Full scale of deposit insurance fund and a securable storage of the fund should be maintained. It is necessary to increase properly premium rate, number of categories and the range for premium of each category, to state treasury guarantee to the finance applied by CDIC to central bank, and to allow CDIC to issue bonds guaranteed by government, (1.5) Operational risk of credit department in farmers’ or fishers’ associations is higher than that in banks. A single deposit insurance fund should be divided into fund of credit department and fund of other banks, (1.6) A mechanism being able to flexibly deal with a systemic baking crisis should be established. 2. Suggestions for establishing the deposit insurance scheme in Mainland-China Mainland-China government has necessity of establishing an explicit deposit insurance scheme. The reasons are (2.1) Moral hazard incurred from an explicit scheme is lower than that from an implicit scheme, (2.2) A explicit scheme can reduce the fiscal finance burden of government, (2.3) An explicit scheme can maintain the independence and effectiveness of monetary policy implemented by the China People's Bank, (2.4) An explicit scheme can institutionalize the payoff of deposit debts and the resolution of problematic banks, (2.5) An explicit scheme is helpful to separate four state-owned banks from the government credit, and also to reduce intervention in these banks from central government, (2.6) An explicit scheme can promote the fair competition among four state-owned banks and the middle or small scale banks, (2.7) An explicit scheme favors the internationalization of banking industry of Mainland-China, (2.8) Deregulation of interest rate should cooperate with an explicit scheme. In order to avert and resolve banking crisis, Mainland-China government, apart from establishing explicit scheme, should take account of (2.1) improving the situation that the central and local governments intervene banks business and exit, (2.2) reinforcing mechanisms of financial supervision, banks rating, early warning of bank crisis and information disclosure, (2.3) promoting risk-awareness and understanding of the explicit deposit insurance scheme from both the banks and the public, (2.4) constructing a complete mechanism for resolving problematic banks and their exiting, and (2.5) establishing a better and healthy society credit system.

博士<br>國立臺北大學<br>法律學系一般生組<br>97<br>The resolution of financial crisis relies on complete dispose scheme. Though the financial authorities play an important role on dispose scheme, deposit insurance system has outstanding impact on it in recent years. On the development of deposit insurance system, it differs with countries. However the role deposit insurance system plays transforms from Pay-Box into Risk-Minimizer and Loss-Minimizer, which enhances its function of the disposition of problem financial institutions. From the point of view of the study the purposes of deposit insurance system are not only to protect depositors by pay-off but also to assist in disposing problem financial institutions by supervision in advance. Through the implementation of these two methods deposit insurance system will function as a protector for uneducated depositors from fearing of bank runs in order to improve the stability of financial market. First, this study analyzes the basic model of the disposition of problem financial institutions in America, Japan and Taiwan. Furthermore, this study researches the new model of the disposition under the amended Deposit Insurance Act of 2007. In the basic model, the thorniest problem is the status of deposit insurance organization while deposing problem financial institutions. Another knotty issue is controversy of right abuse. In the new models, prompt corrective action (PCA) gives great benefit such as timely intervention and termination while deposing problem financial institutions in order to stabilize the market order. Besides, Bridge Bank prevents the assets from defects by temporary undertaking. However, it is worth discussing whether the provisions of contract shall retrain the Bridge Bank while examining the subject more closely. In addition, the question about how to look into the responsibility of staff members and senior management after the bank failed should be carefully concerned. Besides, the disposition of cross-border problem financial institutions was also discussed in this article. Finally, the conclusion summarizes the aforementioned issues and current handling measures.

Law Faculty Charles University in Prague DEPARTMENT OF COMMERCIAL LAW Regulation of the Investor Compensation Scheme in the Legal System of the Czech Republic Abstract of the dissertation Dissertation Supervisor: doc. JUDr. Ivana Štenglová Author: JUDr. Libor Němec April 2012 This dissertation deals with the Czech legal regulation of the investor compensation schemes. The investor compensation schemes are special compensation mechanisms financed by investment firms (securities broker dealers) whose main purpose is a protection of retail investors, customers of securities brokers dealers, against a default of securities broker dealers (investment firms) resulting in their inability to meet their obligations against their clients and to return to the clients their assets which were entrusted to these firms in connection with investment business. In the case of such failure the compensation schemes will compensate the loss to the clients (in a specified amount and under given conditions). The investor compensation schemes therefore substantially strengthen the confidence of investors in the capital market which is absolutely necessary not only for their smooth operation but also for the smooth operation of the whole economy. Regarding the importance of investor compensation schemes for preservation of the...

Relatório de Estágio do Mestrado em Administração Público-Privada apresentado à Faculdade de Direito<br>O presente trabalho tem como objetivo examinar o sistema de supervisão e resolução bancária ao nível europeu, sendo este designado de União Bancária.A União Bancária surge no sentido de dar resposta às deficiências encontradas no decorrer da crise iniciada em 2007. Neste trabalho, inicialmente, serão destacados os objetivos deste sistema, ao passo que numa segunda parte será descrita a sua estrutura, estando esta assente em três pilares: O Mecanismo Único de Supervisão, o Mecanismo Único de Resolução e o Sistema de Garantia de Depósitos. O presente trabalho tem como objetivo examinar o sistema de supervisão e resolução bancária ao nível europeu, sendo este designado de União Bancária.A União Bancária surge no sentido de dar resposta às deficiências encontradas no decorrer da crise iniciada em 2007. Neste trabalho, inicialmente, serão destacados os objetivos deste sistema, ao passo que numa segunda parte será descrita a sua estrutura, estando esta assente em três pilares: O Mecanismo Único de Supervisão, o Mecanismo Único de Resolução e o Sistema de Garantia de Depósitos.O presente trabalho tem como objetivo examinar o sistema de supervisão e resolução bancária ao nível europeu, sendo este designado de União Bancária.A União Bancária surge no sentido de dar resposta às deficiências encontradas no decorrer da crise iniciada em 2007. Neste trabalho, inicialmente, serão destacados os objetivos deste sistema, ao passo que numa segunda parte será descrita a sua estrutura, estando esta assente em três pilares: O Mecanismo Único de Supervisão, o Mecanismo Único de Resolução e o Sistema de Garantia de Depósitos. O presente trabalho tem como objetivo examinar o sistema de supervisão e resolução bancária ao nível europeu, sendo este designado de União Bancária.A União Bancária surge no sentido de dar resposta às deficiências encontradas no decorrer da crise iniciada em 2007. Neste trabalho, inicialmente, serão destacados os objetivos deste sistema, ao passo que numa segunda parte será descrita a sua estrutura, estando esta assente em três pilares: O Mecanismo Único de Supervisão, o Mecanismo Único de Resolução e o Sistema de Garantia de Depósitos.<br>This thesis aims to study the banking supervision and resolutions system at an European level, designated Banking Union.The Banking Union emerges in order to respond to the shortcomings encountered during the crisis initiated in 2007. This thesis has as an initial approach the highlights of the objectives of this system. In a second part I will describe this system structure, being the same based on three pillars: Single Supervisory Mechanism, Single Resolution Mechanism and the European Deposit Insurance Scheme.This thesis aims to study the banking supervision and resolutions system at an European level, designated Banking Union.The Banking Union emerges in order to respond to the shortcomings encountered during the crisis initiated in 2007. This thesis has as an initial approach the highlights of the objectives of this system. In a second part I will describe this system structure, being the same based on three pillars: Single Supervisory Mechanism, Single Resolution Mechanism and the European Deposit Insurance Scheme.This thesis aims to study the banking supervision and resolutions system at an European level, designated Banking Union.The Banking Union emerges in order to respond to the shortcomings encountered during the crisis initiated in 2007. This thesis has as an initial approach the highlights of the objectives of this system. In a second part I will describe this system structure, being the same based on three pillars: Single Supervisory Mechanism, Single Resolution Mechanism and the European Deposit Insurance Scheme.This thesis aims to study the banking supervision and resolutions system at an European level, designated Banking Union.The Banking Union emerges in order to respond to the shortcomings encountered during the crisis initiated in 2007. This thesis has as an initial approach the highlights of the objectives of this system. In a second part I will describe this system structure, being the same based on three pillars: Single Supervisory Mechanism, Single Resolution Mechanism and the European Deposit Insurance Scheme.

Bankowy Fundusz Gwarancyjny jest szczególnym podmiotem funkcjonującym w sektorze bankowym – odpowiada za system gwarantowania depozytów i od niedawna działa również jako organ właściwy do spraw przymusowej restrukturyzacji. Kompetencje Funduszu od 2016 r. rozszerzyły się więc o zupełnie nowe zagadnienia: stał się on przede wszystkim organem wszczynającym postępowanie administracyjne i stosującym szereg daleko idących instrumentów służących restrukturyzowaniu zagrożonych niewypłacalnością banków. Z powyższego wynika, że w związku z nowymi kompetencjami zmianie uległa też pozycja ustrojowa Funduszu. Dodatkowo, jego nowe uprawnienia w zestawieniu z tradycyjną siatką pojęciową prawa administracyjnego oraz analiza stosowanych przez niego prawnych form działania nasuwają spostrzeżenie, że konstrukcja Funduszu nie jest typowa dla określanych w teorii podmiotów administrujących: organów administracji publicznej lub zakładów administracyjnych. Niniejsza praca służy zbadaniu tej hipotezy. W pierwszym rozdziale przedstawiona zostaje dotychczasowa administracyjnoprawna siatka pojęciowa dotycząca polskiego aparatu administrującego. Omówione zostaną podstawowe pojęcia, które składają się na jego elementy: pojęcie podmiotu administrującego, organu administracji publicznej, zakładu administracyjnego. Rozdział drugi dotyczy przede wszystkim organizacji współczesnej sieci bezpieczeństwa bankowego oraz pojęć podstawowych dla zagadnień związanych ze stabilnością sektora bankowego, takich jak, przykładowo, ryzyko systemowe oraz nadzór makroostrożnościowy. Mimo typowo prawnofinansowego charakteru tych pojęć, w niniejszej pracy osadzone one zostają wyłącznie w siatce teoretycznej prawa administracyjnego, co ma na celu wykazanie atypowości regulowanych instytucji prawnych. W rozdziale trzecim analizie dogmatyczno-prawnej poddana zostanie pierwsza główna kompetencja Bankowego Funduszu Gwarancyjnego, tj. gwarantowanie depozytów. Zaadresowane zostaną tu konstrukcje nietypowe dla tradycyjnej siatki pojęciowej prawa administracyjnego, takie jak stosunek ochrony gwarancyjnej, ustalanie wysokości składek, system wyliczania i kontrola prawidłowości danych oraz zagadnienie trudnej do klasyfikacji mocy prawnej aktów wydawanych przez Fundusz. Rozdział czwarty skupia się na nowych kompetencjach Funduszu – przymusowej restrukturyzacji oraz określaniu minimalnych wymogów kapitałowych (ang. MREL). Przeanalizowane zostają zagadnienia związane z prowadzeniem postępowania administracyjnego – szczególne odstępstwa od regulacji k.p.a., pozycja prawna strony postępowania oraz Bankowy Fundusz Gwarancyjny jako organ prowadzący postępowanie. Omówione są w tym miejscu również poszczególne instrumenty przymusowej restrukturyzacji jako konstrukcje niekonwencjonalne w ramach polskiej siatki pojęciowej. Piąty rozdział ma na celu określenie cech podmiotowości administracyjnoprawnej Funduszu, analizę jego organizacji wewnętrznej, pozycję w sieci bezpieczeństwa bankowego oraz ustalenie jego klasyfikacji jako nietypowego podmiotu administrującego. Oparte jest to na wykluczeniu uznania Funduszu za organ administracji czy zakład administracyjny zgodnie z ich charakterystyką przedstawioną w rozdziale pierwszym. Wnioski z niniejszej pracy służą wyznaczeniu pola do dalszych badań nad organizacyjną siatką pojęciową administracji oraz poszukiwaniu odpowiedzi na pytanie, czy pozycja Funduszu i siatka bezpieczeństwa bankowego będzie ulegała dalszym zmianom w gospodarce cyfrowej. Przede wszystkim również, niniejsza praca ma na celu ukazanie, że odpowiednie dostosowanie administracyjnoprawnej siatki pojęciowej służyć może ulepszeniu funkcjonowania aparatu administracyjnego, zwiększeniu jego efektywności oraz w konsekwencji tworzeniu dobrego i sprawiedliwego prawa.<br>The Bank Guarantee Fund is a peculiar entity that functions in the banking sector – it is in charge of deposit guarantee system and has recently taken responsibility for resolution procedure. Thus, since 2016 the Fund’s competences have extended to some new areas: it now serves as a entity initiating administrative proceedings and exercising far-reaching instruments that are meant to restructure failing (or likely to fail) banks. What arises from that is a hypothesis according to which these new competences significantly influenced constitutional and administrative position of the Bank Guarantee Fund. Furthermore, its new powers, in comparison to traditional administrative conceptual framework, can suggest that the Fund’s structure is not consistent with a typical model according to which administrative entities (such as administrative bodies and administrative facilities) are structured. This dissertation’s main objective is to analyze this hypothesis more extensively. First chapter presents a traditional administrative conceptual framework. Concepts constituting Polish administrative apparatus, such as administrative entity, public administrative authority, administrative facility will be examined. Second chapter will cover modern financial (banking) safety net and concepts such as financial stability, systemic risk, and macroprudential supervision. These problems are more common in the scope of financial law rather than for administrative law, therefore they will be analyzed only in comparison to administrative framework which aims to show their atypical administrative character. Third chapter is devoted to legal dogmatic analysis of one of the main Fund’s powers: deposit guarantee system. Atypical constructs such as legal relationship between guarantee and depositor, determining the amount of banks’ contributions to guarantee fund, data control in the calculating systems, legal force of acts issued by the Fund will be a subject of the examination. Fourth chapter concentrates on the Fund’s new competence – resolution and estimation of the amount of minimal requirement for own funds and eligible liabilities. The analysis will cover issues related to administrative proceedings – distinctions from the Code of Administrative Procedure, position of the parties, and the new role of Bank Guarantee Fund as an entity initiating and handling proceedings. This chapter will also cover resolution instruments as unconventional constructs in the Polish administrative conceptual framework. Fifth chapter aims to summarize above mentioned problems and describe specific features of the Fund’s administrative position and subjectivity, its internal structure, place it holds in financial (banking) safety net. The conclusion is that the Bank Guarantee Fund cannot be defined as a public administrative body or administrative facility but it rather functions as an atypical administrative entity which can be researched more extensively in the future, especially in the scope of growing digital economy which might influence deposit guarantee systems all over the world. Above all, this dissertation’s main objective is to prove that proper adjustment of administrative conceptual framework might improve the quality of administrative apparatus by expanding its efficiency.

A crise financeira de 2008 veio demonstrar a ineficiência dos mecanismos de regulação até então utlizados no contexto da União Europeia, e a consequente necessidade de dar um passo em direção a uma União Bancária. Assim, o propósito deste trabalho é a análise dos três pilares deste novo plano regulamentar, bem como o estabelecimento de uma relação entre estes e os vários fundamentos que justificam a necessidade de regular o sistema bancário. Para isso foram analisadas as falhas existentes no sistema anterior à união bancária e em que medida os novos mecanismos são capazes de as combater. Com o desenvolver desta dissertassão percebeu-se que era necessária uma harmonização na aplicação da regulação nos países europeus, ficando também comprovada a necessidade de separar o sistema bancário dos Estados de cada país. Adicionalmente, é utilizado o caso do Banco Espírito Santo para ilustrar a aplicação prática de um processo de resolução no contexto de um mecanismo único de resolução, à data ainda em desenvolvimento. Primeiramente, neste estudo de caso tenta perceber-se, com recurso a vários indicadores financeiros e comparações com outros bancos, se em algum momento teria sido possível prever o colapso do BES. A conclusão a que se chega é que a distorção das contas do banco, associada à complexidade do grupo em que este se inseria tornaram muito difícil, senão impossível, esta previsão. Quanto ao processo de resolução, concluiu-se que a sua escolha foi a melhor decisão em termos de estabilidade do sistema bancário, tendo sido possível evitar danos maiores para os clientes do próprio banco assim como para os restantes bancos que seriam afetados pelo pânico que se viveria em caso de insolvência. Fica aqui a forte opinão que, apesar de ainda incompleta e com um caminho a percorrer, a União Bancária é benéfica e pode contribuir para o fortalecimento do sistema bancário europeu.<br>The financial crisis of 2008 demonstrated the inefficiency of the regulation mechanism that had been used in the European Union. Consequently, the financial crisis further showed the need to move towards a Banking Union. The aim of this study is to analyse the three pillars of the new European regulatory framework and to establish a relationship between them and the fundamentals of banking regulation. To do so, we analyse the failures of previous systems and how this union could prevent those failures. In this dissertation we understood that there is a need of harmonization in the application of regulation across Europe, being also demonstrated the need of separation between the bank system and the soveigns. Additionally, the case of Banco Espírito Santo is used to illustrate the application of a resolution process within the single resolution mechanism, which was, at the time, still in a development stage. First, we try to understand, by looking at several financial indicators and comparisons if at any moment it would have been possible to forecast the collapse of BES. We conclude that given the distortion of information and the complexity of the group which the bank was part of, it was almost impossible to have known prior about the real situation of BES. Regarding the resolution process, we concluded it was the best option for the financial stability, by avoiding bigger damages for both the clients and the whole banking system, preventing the feeling of panic that could have had hurt other banks. At the end of this dissertation we concluded that, although it is not complete yet, the Banking Union is benefic and it does indeed strengthen the European banking system.