European Banking Governance: Historical Evolution and Future Perspectives

by Natividad Araque Hontangas and Rita Mascolo

Abstract: This article reconstructs the evolution of banking governance in Italy and Europe from a long-term perspective, highlighting the complex and layered nature of the relationship between credit, the state, and the market. Starting from the institutional paradigm outlined in the Banking Law of 1936, which conceives the bank as an infrastructure for systemic stability, the article examines the transformations brought about by financial liberalisation, the privatisation of credit institutions, and the development of prudential supervision. The 2007–2012 crisis highlighted the transnational nature of risk and the persistent dependence of stability on national fiscal support, prompting the creation of the Banking Union. However, this architecture remains incomplete due to the absence of a common deposit guarantee scheme, which continues to place the ultimate backstop of confidence within Member States. Banks are therefore private actors with a public function, insofar as the continuity of their activities affects the stability of the entire economic system. It follows that stability should be understood as the outcome of an institutional balance between the managerial autonomy of intermediaries and collective guarantee mechanisms.

Summary: 1. Introduction; 2. Credit as a public good: from the 1929 crisis to the Banking Law of 1936; 3. From structural supervision to prudential supervision in the age of financial globalisation; 4. Privatisation, the TUB and the TUF: from public banks to corporate banks; 5. The European Banking Union and its incompleteness; 6. Conclusions.

1. As early as the 18th century, the German jurist Augustin von Leyser had clearly understood the centrality of the credit function, stating that the circulation of currency and means of payment in economic life plays the same role as the circulation of blood in the human body. Indeed, he stated: “cambia scilicet illud sunt in commerciis, quod circulatio sanguinis in corpore humano. Sicuti corpus per circulationem sustinetur, et ea interrupta languet atque corrumpitur, ita nec commercia, si circulationem cambiorum demas, florere poterunt”[1]. Beyond its metaphorical value, this comparison allows us to grasp the fundamental element of the institutional nature of the bank, as an actor that not only administers financial resources but also constitutes a precondition for the existence of collective economic life. Credit is not simply an intertemporal exchange of means, but a regulated fiduciary relationship, whose intrinsic fragility requires regulatory frameworks capable of preventing instability and ensuring continuity in the production and saving circuits.

Reconstructing the evolution of banking governance requires an interdisciplinary approach. It does not coincide with either corporate law or prudential supervision alone, but is part of the historical trajectory through which the relationship between credit, the state, and the market has been progressively redefined[2]. This intersection between the public and private spheres emerges particularly clearly in the evolution of credit governance models.

In Italy, the Banking Law of 1936 formalised the bank as a public interest enterprise, regulating its activities through the functional specialisation of short-term and medium-to-long-term credit, administrative authorisation for market entry and a controlled development system, with the Bank of Italy acting as the systemic authority. Stability was pursued through structural coordination aimed at limiting the financial system’s exposure to cyclical fluctuations in the real economy[3].

Starting in the 1960s and 1970s, the opening up of markets and the increasing mobility of capital rendered the 1936 framework, designed for a closed national economy in need of stable industrial credit, insufficient. Stability could no longer be guaranteed through mere administrative restrictions on competition but required a transformation of both ownership structures and supervisory mechanisms. This process led to the reform of the 1990s, with the Amato-Carli law and the Consolidated Banking Act of 1993 (hereinafter, TUB), which returned banks to the joint-stock company model and overcame functional specialisation[4]. At the same time, the Basel Accords marked the transition from a structural supervision model to a prudential supervision model, focused on the ability of intermediaries to manage their risks through adequate capital requirements and internal control systems. This transformation shifted the focus from the structure of the credit system to the soundness of balance sheets and the quality of internal control mechanisms.

The increase in the size and complexity of banks gave rise to systemic risks, leading to configurations of “too big to fail”. The 2007–2008 crisis demonstrated that, in the euro area, the stability of systemically important institutions continued to depend on the fiscal capacity of their home country, thus strengthening the link between banking risk and sovereign risk. The European response led to the creation of the Banking Union, comprising the Single Supervisory Mechanism, the Single Resolution Mechanism, and the introduction of the bail-in regime, thereby shifting stability from a system of national controls to supranational coordination of internal governance, risk management, and resolution procedures. However, the absence of a common deposit guarantee scheme means that the framework remains incomplete. To date, supervision is European, while ultimate responsibility remains at the national level[5].

The interpretative hypothesis is that current banking governance is the result of historical stratification: the idea of stability as a public good has gradually become intertwined with the transformation of banks into financial enterprises and, subsequently, with the growing Europeanisation of supervision and crisis management procedures. The genealogical reconstruction of this process reveals that the transformations in banking governance are not merely regulatory adaptations but reflect long-term shifts in the location of economic trust.

The article, therefore, aims to highlight both continuity and discontinuity in the evolution of the Italian and European banking systems, in order to clarify how the relationship between stability, competition, and public interest has been redefined over time and which historical legacies continue to shape current configurations.

2. The history of European banking governance can be reconstructed through the evolution of the relationship between the autonomy of credit intermediation and public intervention aimed at systemic stability. This is a dynamic relationship that has been redefined in times of crisis, when the balance between market activity and regulatory function has revealed structural limitations.

The crisis of 1929 marked a profound rupture not only in the economic cycle, but also in the entire organisational model of the market–banking system. Before 1929, the mixed banking model was prevalent in the major industrialised economies, in which the same intermediary collected short-term savings and allocated them to long-term industrial financing, sometimes acquiring stakes in the companies financed[6]. In Italy, this configuration had become established during the post-unification industrialisation process and had become a structural element of support for the productive apparatus, so that banks not only performed an allocative function, but also directly influenced industrial strategies[7].

This structure had an inherent fragility due to the maturity mismatch. Long-term financing was supported by short-term liabilities, exposing intermediaries to the risk of being unable to meet sudden demands for liquidity. In the absence of institutional risk management and deposit guarantee mechanisms, the system’s stability depended essentially on collective confidence. When, with the onset of the 1929 crisis – the causes of which historians have mainly attributed to the real economy – aggregate demand slowed and industrial investment contracted, that confidence evaporated and the imbalance between deposits and loans quickly turned into a systemic crisis. The simultaneous withdrawal of deposits transformed a crisis of profitability into a crisis of liquidity. To meet cash demands, banks were forced to liquidate illiquid assets at emergency prices, exacerbating losses and accelerating bankruptcies. The literature has interpreted the intertwining of short-term credit and long-term industrial financing not as a mere operational relationship, but as a systemic constraint, which made banks and industry mutually vulnerable in a sort of “deadly embrace”[8]. In this regard, Mattioli wrote that the relationship between banks and industry had resulted in “catoblepasism”, i.e. “from a physiological symbiosis, it had transformed into a monstrous Siamese twinship”[9].

Added to this was the belated and ineffective response of the monetary authorities. Central banks did not have the technical and operational tools to support an adequate increase in liquidity – partly due to the absence of a sufficiently developed securities market for open market operations – nor did they have an interpretative framework capable of understanding that the crisis originated in the fall in aggregate demand and not in mere speculative distortions. Instead, a restrictive approach prevailed, based on the idea that instability stemmed from excess credit, resulting in policies that took on a pro-cyclical character. Far from containing the recession, this approach contributed to amplifying it, transforming a deep contraction into a prolonged depression[10].

The crisis of 1929 made it clear that credit stability was not a spontaneous outcome of competitive interaction between intermediaries, but rather a public good, whose protection required the establishment of a coherent institutional framework for regulation and systemic supervision. The institutional response led to a redefinition of the role of banks in the economy. Indeed, the Italian reform under the Banking Law of 1936 was part of a trajectory already traced by the major industrial economies towards models of public control of financial intermediation and systemic protection of savings.

In the United States, the Glass-Steagall Act of 1933 represented the first systemic application of this new approach. The separation between commercial and investment banking was introduced to prevent private savings from being exposed to fluctuations in speculative markets. The establishment of the Federal Deposit Insurance Corporation helped restore depositors’ confidence, thereby reducing the risk of bank runs. Financial stability was thus recognised as a function of general interest, to be ensured through mechanisms for regulating and protecting savings. A similar transformation took place in Germany, where the Kreditwesengesetz of 1934 (Banking Law) reintroduced a coordinated banking system subject to centralised supervision, aiming to prevent the financial amplification of industrial crises and ensure the continuity of the payment system as an essential element of macroeconomic stability. In Belgium, Royal Decree No. 185 of 1935 took similar steps, granting the public authorities incisive regulatory powers and formally recognising the systemic role of credit in macroeconomic equilibrium[11].

Historical and legal literature largely agrees that the Banking Law of 1936 (Decree Law No. 12 of 12 March 1936) was the result of a long and complex process of interventions and proposals aimed at redefining the credit system and, more generally, the role of finance in the national economy. The prudential measures introduced in 1926 (Decree Laws No. 1511 of 7 September 1926 and No. 1830 of 6 November 1926), while marking the first institutional recognition of the systemic nature of credit intermediation, proved insufficient in the face of the depth and speed of the 1929 crisis. Still in the midst of the crisis, two key institutions for public intervention in the financial sector were created: the Istituto Mobiliare Italiano (IMI, Italian Institute for Industrial Credit) in 1931 and the Istituto per la Ricostruzione Industriale (IRI, Institute for Industrial Reconstruction) in 1933[12]. The former was designed to provide long-term financing and support the conversion of the productive apparatus; the latter operated as a tool for rescuing and subsequently restructuring large mixed banks and the industrial complexes they controlled. Through the IRI, the state not only assumed the liabilities of the major banks, but also took direct ownership of them, transforming itself from an external guarantor of financial order to a protagonist in the institutional reconfiguration of the bank–industry relationship.

In this trajectory, the Banking Law of 1936 was conceived as a response to a “failure of the invisible hand”, marking the end of a purely formalistic approach to supervision and the emergence of genuine public governance of credit[13]. The new system replaced the previous supervision, which focused on formal legality, with a model aimed at preventing instability and directing the allocation of financial resources according to macroeconomic objectives defined by the political authorities. Banking supervision thus took on structural and systemic characteristics, replacing ex post corrective measures with integrated and planned regulation of the entire sector. The resulting institutional structure was based on a political-technical dyarchy, since policy-making power was concentrated in a Committee of Ministers chaired by the Head of Government, while administrative implementation was entrusted to a technical body capable of translating policy into general administrative acts with erga omnes regulatory effect[14] . The 1936 legislation was also structured as a framework law: the law identified the bodies with powers of intervention and the material areas within which those powers could be exercised, but did not rigidly predetermine their purposes. This allowed for a wide margin of discretion in the exercise of supervision, to such an extent that some legal scholars spoke of a “functional indifference” in the aims of public action, which could result in multi-purpose or indeterminate objectives being pursued in practice[15] . In this context, the Bank of Italy gradually became the operational hub of the political-technical dyarchy, in that, although formally subordinate to the Committee of Ministers, it assumed the role of technical centre of supervision, ensuring systemic stability through increasingly sophisticated regulatory and inspection tools.

The law introduced a functional distinction between credit companies, which specialise in short-term deposits and loans, and specialised credit institutions, responsible for medium- and long-term financing, with the aim of preventing the maturity imbalances generated by the mixing of short-term deposits and illiquid loans that had characterised the mixed banking model. This specialisation was part of a framework of institutional pluralism, which, far from being a mere historical legacy, became the criterion for access to financial markets. Savings banks, cooperative banks, monts-de-piété, public-law institutions, and banks of national interest operated according to different rules, consistent with their economic and territorial functions. In this way, supervision directed the allocation of credit according to productive and territorial priorities considered strategic, in line with the ownership restructuring initiated by the IRI. The result was a mixed economy model in which the state, credit authorities, and private intermediaries participated, with different but complementary roles, in the production of systemic stability, making the 1936 law not only a regulatory reform but also an economic order[16].

In this context, stability took precedence over competition. The Bank of Italy exercised authorisation powers over mergers, branch openings, and structural changes, guiding the configuration of the system in accordance with macroeconomic balance. Crisis management was primarily implemented through the absorption of institutions in difficulty by more solid entities, according to the logic that Guido Carli defined as “socialisation of risks”[17]. This resulted in a model of directed governance, in which banks were not considered fully autonomous enterprises oriented toward profit maximisation, but institutions with a systemic function, responsible for contributing to credit stability and the protection of savings.

The supervisory framework outlined by the Banking Law of 1936 gave credit authorities – primarily the Bank of Italy – broad powers of guidance and control, aimed at ensuring the stability of the system and the organisational adequacy of intermediaries. This control, conceived by Giannini as “managerial authority” and “verification of functions,” was to be exercised with due regard for the managerial autonomy of banks, avoiding forms of “supermanagement” that would replace internal bodies[18]. In practice, however, supervision gradually took on a pervasive character, affecting the decision-making sphere of operators and, at times, going beyond the control of formal legality to the assessment of the merits of business decisions.

Supervisory instructions and authorisation procedures revealed that the protection of the stability and efficiency of the credit system ultimately limited the operational autonomy of institutions, often through specific requirements regarding operational conditions and organisational structure[19]. This has given rise to conflicting doctrinal analyses[20]: some have recognised the legitimacy of such interventions as functional to the prevention of inefficiencies and risks, while others have seen them as direct interference by the authorities in bank management. Ultimately, the balance between protecting the public interest and entrepreneurial freedom proved unstable, as the priority given to systemic stability made banking supervision inherently expansive, to the extent that it restricted the autonomy of the banking industry.

3. The Banking Law of 1936, although conceived within the corporatist system, survived the collapse of the state that had produced it and the profound constitutional changes of the post-war period. This continuity was not merely the result of regulatory inertia, but an expression of the conceptual soundness of the system. As Parrillo effectively observed: “This is a sign that the framework of this law has proven to be solid, rational and flexible, such that it has been able to adapt to all the dynamic events that have subsequently occurred. The key to understanding this success lies in the fact that the legislative provisions – which governed credit and savings for about 60 years with overall satisfactory results – conferred broad discretionary powers on the bodies responsible for managing the regulations, and these authorities have, as has been almost unanimously recognised, made moderate and discreet use of them”[21].

It was precisely this administrative discretion, understood not as arbitrariness but as the capacity to adapt regulatory instruments to changing economic conditions, that allowed the 1936 model to operate as an adaptive architecture. This flexibility proved decisive in the post-war reconstruction, when the credit system was mobilised as an essential infrastructure for development, supporting industrial reconversion and productive modernisation. The public–private financial circuit – structured around the Bank of Italy and state-owned entities, with the IRI acting as the hub of banking and industrial ownership – functioned as a channel for directing the resources required for accumulation. The international recognition of the stability of the lira in the early 1960s, marked by the award of the “Monetary Oscar” in 1960 and 1964, attested to the system’s capacity to combine monetary stability with support for development, despite persistent territorial imbalances[22] .

During the economic miracle, this system consolidated into a mixed economy model, in which the prevalence of public ownership of banks and credit policy played a macroeconomic coordination role, guiding investment and competitive dynamics. Economic planning and extraordinary interventions in the South updated, within a constitutional and democratic framework, approaches already tried and tested in the 1930s, but now aimed at widespread growth and national cohesion.

From the second half of the 1960s onwards, developments in economic and financial circuits began to put pressure on the structure outlined in 1936. The growing openness of international markets, the expansion of trade and the emergence of more complex financial instruments gradually changed the relationship between credit, industry and the state. Banks, designed to operate in a national economy characterised by relatively stable needs and planned allocation of liquidity, found themselves operating in a context marked by greater capital mobility, international competition and faster economic cycles. In this context, stability – which in the 1936 model derived from structural control of credit supply – became more difficult to guarantee through administrative regulation alone. The functional specialisation between short-term and medium- to long-term credit, the prevalence of public ownership and the protected nature of the banking industry began to show allocative and operational limitations. Supervision, geared towards preserving systemic equilibrium, tended to maintain established structures rather than encourage innovation and competition, while the effective scale of financial markets was gradually expanding beyond national borders. The model did not lose its internal rationality, but it became increasingly inadequate in a context in which stability, development and risk no longer coincided with the dimension of the nation-state[23].

In the 1970s, the international dimension of banking thus took on a structural character, accelerated by financial globalisation, the expansion of multinational corporations and the financing needs of developing countries.[24]. Added to this were regulatory asymmetries between national systems – concerning reserve requirements, deposit insurance, capital adequacy requirements, and foreign exchange regulations – which encouraged the relocation of banking operations to less regulated jurisdictions. The internationalisation of banking took place mainly through three channels: transactions in currencies other than the national currency, relationships with non-resident counterparties, and the opening of branches and bank subsidiaries abroad[25]. Banking governance, created to safeguard stability as a public good within national borders, thus found itself operating in a system where risk and liquidity circulated on a transnational scale, while safeguards remained national. The misalignment between the scale of risks and the scale of institutions represented the structural fracture of the 1970s. As Onado observed: “the stability of a financial system was [still] seen essentially as a problem of national dimensions and scope, which, as such, had to rely on national solutions”[26].

The limitations of a system that subordinated banks to systemic stability, but not yet to competitive efficiency, became apparent. Three structural problems emerged: allocative inefficiency, politicisation of credit decisions, and organisational rigidity of intermediaries. The persistent separation between short-term and medium- to long-term credit and the specialisation of credit institutions produced a segmented system that was unable to adapt the financial supply to changes in the productive structure, which was increasingly oriented towards capital- and innovation-intensive investments. This led to a slowdown in industrial financing capacity and a growing dependence on public support measures. Furthermore, the overlap between political steering and bank management – particularly pronounced in public credit institutions and banks of national interest – encouraged discretionary credit allocation, often independent of creditworthiness and profitability, leading to the stabilisation of uncompetitive companies and protected sectors.

The start of the process of transforming the Italian credit system can be traced back to the EU framework of the 1980s. Council Directive 88/361/EEC on the liberalisation of capital movements and the Economic and Monetary Union project outlined in the Single European Act of 1986 (ratified by Law No. 909 of 23 December 1986) marked a turning point. As established by Article 8A of the EEC Treaty – introduced by the Single European Act – the objective was to establish, by 31 December 1992, an internal market defined as “an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured”. The full liberalisation of capital movements played a decisive role in redefining the Italian banking sector, promoting the country’s financial integration and laying the foundations for overcoming forms of supervision based on rigid administrative constraints and quantitative limitations on operations.

At the same time, there was a gradual increase in the entrepreneurial character of credit institutions, accompanied by a trend towards liberalisation, which led to a reduction in the discretionary powers of the supervisory authority. The first and second banking directives should be understood in this context: Directive 77/780/EEC, which established objective criteria for the authorisation of new credit institutions, and Directive 89/646/EEC, which redefined the overall organisational structure of the sector, outlining the framework of activities that could be carried out. As Capriglione observes, this regulatory framework “is the logical premise for the abandonment of the criterion of ‘market need’, since the granting of authorisation is based on an assessment of the economic conditions of the credit market”[27]. At the same time, the spatial monopoly of credit institutions was overcome, so that branch expansion was no longer subject to discretionary measures but resulted from competitive access to the market. This marked the end of the logic of territorial jurisdiction, which, pursuant to Article 28 of the Banking Law of 1936, had shaped competition by delimiting the geographical areas in which banks could operate.

Even more innovative was the affirmation of the principle of mutual recognition, according to which any bank authorised and supervised in its home Member State could operate in other Member States in accordance with local law and under the supervision of the competent authority (the so-called principle of home-country control). The host Member State was allowed to impose compliance with domestic rules only insofar as they were compatible with Community law and justified by reasons of general interest. This required national systems to develop forms of mutual regulatory trust, with profound implications for the very concept of financial stability. Community harmonisation did not eliminate domestic specificities, but redefined their hierarchy, subordinating discretionary supervisory instruments to common principles of transparency, contestability of markets, and competition protection[28]. It is no coincidence that Directive 89/646/EEC was defined by Patroni Griffi as “the cornerstone of the entire Community edifice”, as it marked the transition from a model based on administrative control of banking operations to a system in which stability was ensured through common supervisory rules, market-based discipline and capital adequacy requirements, alongside the progressive integration of financial markets[29]. At the same time, the principle of mutual recognition and home-country control reduced the discretion of national authorities. This resulted in a shift from dirigiste and structural supervision to prudential supervision based on risk control, compliance with minimum capital requirements, and “sound and prudent management,” as subsequently incorporated into the Consolidated Banking Act of 1993 (Legislative Decree No. 385 of 1993, TUB). This shift laid the groundwork for a more competitive system, oriented towards efficiency, capitalisation, and the modernisation of the Italian credit industry.

European dynamics were inevitably intertwined with the globalisation of financial markets and with the evolution of international prudential standards developed by the Basel Committee, established in 1974 at the Bank for International Settlements[30]. Stability was no longer ensured through administrative protection of the system, but through the intermediary’s capacity to absorb losses with its own capital; risk did not disappear, but had to be identified, measured, and managed. However, it should be noted that the regulatory framework emerging at the supranational level was characterised by reduced democratic accountability, since, as Battini effectively observed, “when deciding collectively at the global level, domestic regulators tend to escape the guarantees and controls to which they are subject in the domestic legal system. The control exercised by national parliamentarians and judges over their respective governments and administrative apparatus fades because, while the latter form joint bodies with their counterparts in other countries, the former remain separate from each other and anchored to the local dimension”[31]. Financial stability was thus taking on the characteristics of regulation without a demos, grounded in technical procedures and cooperation between authorities rather than in representative legislative decision-making.

In 1988, the first Basel Accord introduced a minimum capital requirement of 8% in relation to risk-weighted assets, marking the transition from structural supervision to capital constraints as the primary tool for governing stability. The application of this principle in the Italian context led to a strengthening of intermediaries’ capital positions and redefined the role of the Bank of Italy, orienting it towards verifying the overall soundness of institutions rather than directly regulating their operations. Subsequently, in 2004, Basel II broadened the perspective further. In addition to a more sophisticated measurement of risk, attention shifted to the quality of internal processes and control structures. Stability was no longer linked solely to capital adequacy, but to the institution’s capacity to assume risk in a manner consistent with its organisational configuration. Supervision thus returned to influencing the decision-making structure of banks, not through ex ante administrative limits, but through the assessment of the adequacy of internal risk-governance systems[32].

This completed the transition to a model of banking conceived as a responsible financial intermediary, embedded in a supranational regulatory framework and entrusted with contributing to stability through its management choices. This structure was systematically incorporated into the TUB, which brought together competition, efficiency, and sound and prudent management into a coherent regulatory framework.

3. The early 1980s marked the beginning of a period of transformation in the history of Italian banking governance. The exchange of letters on 12 February and 6 March 1981 between Treasury Minister Nino Andreatta and Governor Carlo Azeglio Ciampi put an end to the Bank of Italy’s obligation to purchase government bonds left unsold at auction. The so-called “divorce” between the Bank of Italy and the Treasury restructured the relationship between monetary policy, public finance and the credit system, redefining the very notion of stability. As Salvemini recalls, the context was characterised by “inflation [which] was running at a monthly rate of close to 2%” and a public budget reduced to “a notarial document that simply reflected the accounting effects of legislation passed in the past”[33]. Monetary financing of the deficit had, in fact, eroded the effectiveness of monetary policy and compromised the international credibility of the lira. Hence the need to separate the role of the central bank as banker to the Treasury from the conduct of monetary policy, shifting deficit financing back onto the market and restoring the Bank of Italy’s autonomy in liquidity management.

Stability, which in the 1936 model had been a tool for supporting industrial development, thus took the form of a monetary and reputational constraint, based on interest rate control and the functioning of financial markets. This led to the gradual dissolution of the historical complementarity between banking and industry and, as credit was no longer a lever of industrial policy, banks ceased to be an infrastructure for development and began to take the form of risk-regulated financial enterprises. The “divorce” was not, therefore, the immediate cause of the privatisations of the 1990s, but it constituted the institutional condition that made them possible; once the public function of bank ownership had been removed, its continuation became increasingly difficult to justify within the new stability regime[34] .

This was the context for the institutional transformation project launched with the Amato–Carli Law (Law No. 218/1990) and Legislative Decree No. 356/1990, which introduced the separation between the public entity (the former public-law credit institution) and the operating banking company, converting public-law credit institutions into joint-stock companies. This reform constituted the legal and organisational basis for the privatisation of the banking system, as it separated the public function of ownership and policy direction from the entity responsible for carrying out banking activities on the market. As Troiano pointed out, “the objective of the Amato Law was pursued by providing two methods of restructuring the public sector: a) the direct transformation into joint-stock companies and b) the transfer of the banking business of the public credit institution to one or more existing or newly established joint-stock companies. Restructuring through transfer gave rise to two entities: the transferee banking company (of the credit institution) and the transferring public entity (the latter commonly referred to as a banking foundation)”[35].

The Amato Law therefore addressed the issue of the privatisation of the sector, introducing instruments that made it possible to transform public credit institutions into joint-stock companies, while simultaneously creating banking foundations as private-law, non-profit entities. This transformation was not merely organisational, but reflected a deeper change in the legal and economic nature of banking institutions: it marked the transition from a system based on organic ties with the state and institutional protection mechanisms to one oriented towards competition, market capitalisation, and the financial responsibility of the intermediary[36]. The new structure had a direct impact on the supervisory regime. The replacement of the previous model involved abandoning the discretionary use of supervisory powers, conceived as neutral in light of the “functional indifference” of public action. With the Amato–Carli law, by contrast, stability was no longer pursued through the administrative control of operations, but through risk assessment and capitalisation. This affirmed the model of the universal bank, no longer bound by the functional specialisation between short-term and medium- to long-term credit, and was accompanied by the organisational model of the multifunctional banking group, capable of coordinating banking, financial and instrumental activities. This organisational evolution corresponded to a reformulation of the supervisory paradigm: from restrictive administrative control of operations to prudential supervision, aimed at assessing asset quality, the risk profile and the intermediary’s resilience under stress.

The transformation of credit institutions into joint-stock companies and the simultaneous establishment of banking foundations prompt, in the legal literature, a reflection on the nature of banks in the new regulatory framework. On the one hand, the adoption of the corporate form and subjection to capital regulations lead to an interpretation of the banking business from the perspective of corporate governance, whereby operational efficiency, managerial autonomy and the ability to monitor risk become central criteria for the stability of the intermediary. On the other hand, the credit function continues to place banks within a framework marked by the constitutional protection of savings, making banking activities relevant to systemic equilibrium and to the continuity of financial flows to the real economy. It follows that privatisation does not entail abandoning the public-interest dimension of banking, but rather relocating the safeguarding of stability: no longer entrusted to the public nature of the operator and the administrative regulation of conduct, but to prudential supervision and risk capitalisation as instruments for guaranteeing the general interest[37] .

This process was part of a broader shift in mainstream economic thinking, which in the 1980s and 1990s saw the market as the primary mechanism for the efficient allocation of resources and financial discipline as a prerequisite for macroeconomic stability. In this context, the privatisation of the banking system was not conceived as a merely organisational measure, but as an adjustment to a new institutional paradigm based on competition, financial transparency and the capital adequacy of intermediaries. The Maastricht Treaty (1992) consolidated this framework, establishing the independence of the central bank and making participation in the Economic and Monetary Union (EMU) conditional on compliance with fiscal discipline and price stability constraints. The configuration of the bank as an enterprise subject to market risk was thus consistent with a model of economic governance in which stability no longer derived from public credit management, but from the financial soundness of the intermediaries that supplied it[38].

The season of banking governance reform culminated in the Consolidated Banking Act of 1 September 1993, which systematised the transformation process that had begun in the 1980s and accelerated with the Amato–Carli reform. As La Francesca observes, “the new banking act concludes a long legislative process attributable both to the implementation of EEC directives […] and to the systematic structuring of rules having the force of law gradually incorporated into the original body of the Banking Law of 1936 and essentially referring to the modifications, additions and innovations gradually promoted by the Bank of Italy itself”[39].

The Consolidated Banking Act redesigns the supervisory framework by assigning explicitly defined objectives to the credit authority. Article 5 of the TUB provides that: “The credit authorities shall exercise their supervisory powers, […] with regard to the sound and prudent management of the supervised entities, and the overall stability, efficiency and competitiveness of the financial system.” Sound and prudent management thus takes on the role of a general clause governing the conduct of intermediaries and, at the same time, a criterion for limiting public intervention. Stability no longer derives from the administrative structure of the market or the functional specialisation of banks, but from the ability of intermediaries to assess and manage risks, supported by adequate capital and organisational safeguards. The flexibility of this clause forms the basis for an evaluative and dynamic supervisory model, based on the information, regulatory and inspection powers attributed to the technical authority. The result is a supervisory framework that strikes a balance between the operator’s managerial autonomy and prudential control aimed at preserving operational continuity and the soundness of balance sheets[40].

 This new structure redefines the role of the Bank of Italy, which has gone from being an authority responsible for shaping the structure of the system and overseeing market access to being responsible for verifying corporate soundness, the consistency of internal governance and the resilience of intermediaries under adverse conditions. This results in a clearer division between the political function, which is responsible for defining the general objectives of the financial system, and the administrative function, which is oriented towards the technical control of stability. Credit governance thus tends to take the form of technical regulation rather than public management of resource allocation. Prudential supervision therefore becomes the arena in which the tension between the private nature of banking and the public importance of protecting savings is addressed, a tension that had already emerged in the debate following the Amato reform and is consistent with the international regulatory framework defined by the Basel Accords.

In this context, sound and prudent management takes on the role of an organising criterion for banking activity, linking stability, organisational structure and decision-making: the protection of capital integrity is no longer pursued through administrative limits on operations, but through the responsible autonomy of intermediaries in defining their own risk strategies. Public intervention therefore takes on an evaluative character, aimed at verifying the sustainability of management choices. This is also confirmed at the European level: Article 10 of Directive 93/22/EEC requires that prudential rules cover not only capital, but also administrative and accounting organisation and internal controls, thereby linking the stability of the system to the soundness of corporate governance.

Transparency becomes an essential tool of competitive discipline: in the new institutional framework of banking intermediation, operators are no longer accountable solely to the supervisory authority, but also to savers and financial markets, to whom they must guarantee the intelligibility of management decisions and the verifiability of decision-making processes. The disclosure of information is therefore not merely informative, but constitutes a structural condition for the legitimacy of corporate action, in a system in which stability depends on the credibility of intermediaries and on the quality of the organisational structures responsible for risk management. This configuration has also been progressively consolidated in case law: in judgments nos. 300 and 301 of 2003, the Constitutional Court affirmed the subjective autonomy of banking foundations with respect to the companies to which they transfer assets, excluding any residual possibility of using the bank as an instrument of public policy; likewise, the Court of Cassation (Section I, 14 February 2008, no. 3715) qualified prudential supervision rules as mandatory professional standards of qualified diligence, attributing to directors a responsibility that concerns not only compliance with general company law, but also adherence to the organisational and capital requirements inherent in the credit function[41].

Unlike industrial governance, which is primarily oriented towards the maximisation of shareholder value in the short term, banking governance is structurally required to maintain a balance between profitability, operational continuity and systemic stability. Banks therefore remain enterprises of public relevance, in which the freedom of economic initiative is functionally limited by the constitutional protection of savings pursuant to Article 47 of the Constitution. The transformation into a joint-stock company, initiated by the Amato reform and consolidated in the TUB, does not imply the assimilation of the banking enterprise to the ordinary corporate model, but rather brings to light its hybrid nature, situated at the intersection between entrepreneurial autonomy and the pursuit of systemic objectives.

The expansion of managerial autonomy implies that the definition of the operational perimeter, the choice of internal governance models and the establishment of controls constitute structural conditions for balancing entrepreneurial freedom with the general interest. From this perspective, the articles of association play an organisational role in shaping the bank’s institutional structure, complementing the provisions of the civil code in defining the corporate purpose, the allocation of powers and the form of administration. The board of directors is entrusted with the exclusive management of the company; the shareholders’ meeting intervenes only in decisions concerning the existence of the entity or the structure of its capital; the board of statutory auditors, which pursuant to Article 52 of the TUB is required to promptly report any irregularities to the Bank of Italy, functions as an internal hinge between corporate control and public supervision, acting as an early warning mechanism for situations potentially harmful to stability. The resulting concept of stability is therefore no longer founded on the administrative organisation of operations, but on the organisational responsibility of the intermediary and the evaluative nature of supervisory action, according to a paradigm in which the protection of savings is guaranteed through the suitability of the institution’s internal structure to identify, measure and manage risk.

At the same time, the Bank of Italy’s secondary legislation has progressively strengthened internal organisational safeguards, requiring intermediaries to adopt risk control structures, compliance functions and mechanisms for continuous reporting to senior management. Stability is therefore no longer ensured through administrative limits on operations, but through the banking company’s ability to assess, manage and absorb risk within its own organisational structure. The corporate bodies are thus responsible not only for strategic choices, but also for designing the internal architecture and ensuring the effectiveness of decision-making processes, according to a model in which managerial autonomy is translated into organisational responsibility. This has led to the spread of codes of conduct, ethical standards and self-regulatory instruments, reflecting the awareness that the credibility of intermediaries depends not only on formal compliance with legal rules, but also on the cultural quality of their conduct. Banking governance thus assumes a preventive function against strategies aimed at the maximisation of immediate profit to the detriment of systemic stability, linking the protection of savings to the integrity and reliability of internal processes[42].

The deregulation initiated in the late 1980s and early 1990s led to the definition of a highly technical supervisory model, centred on objective prudential rules, the accountability of corporate bodies and the evaluative monitoring of the sustainability of operational choices. This produced a structural link between the liberalisation of banking activities and the strengthening of internal controls: greater autonomy necessarily implied greater responsibility in risk management. The reform of company law in the early 2000s further reinforced statutory flexibility and the managerial role of the board of directors, promoting the banking group as the natural organisational form for the integrated management of financial functions[43]. However, the expansion of operations and the increasing integration of financial markets heightened the relevance of reputational risks, showing that stability depends not only on capital strength but also on the consistency between business strategies, financial structure and responsibility towards entrusted savings. This dynamic forms part of a broader process of Europeanisation of banking regulation, the full scope of which would become evident during the crises of the following decade and, subsequently, in the construction of the Banking Union.

In this context, the Consolidated Law on Financial Intermediation (Legislative Decree No. 58 of 24 February 1998), commonly known as the TUF, represents a further decisive step in the transformation of the Italian financial system. It completes the reform process initiated in the 1980s and consolidated with the Consolidated Banking Act, marking the transition from a model of intermediation centred primarily on bank credit to a system in which the allocation of savings increasingly takes place through capital markets, giving rise to a more complex and interdependent structure of relationships between banks, markets and investors. While the TUB of 1993 rationalised the structure of credit intermediation, anchoring stability to the capital adequacy of intermediaries and to sound and prudent management, the TUF intervenes in the complementary field of securities markets and investment services regulation. It transposes the European directives on financial intermediation and introduces a framework in which transparency of information, fair conduct and the quality of decision-making processes constitute essential conditions for allocative efficiency. This consolidates a dual supervisory model, whereby the Bank of Italy is responsible for the prudential supervision of banking intermediaries, while Consob is entrusted with investor protection and the orderly conduct of trading. The bank thus becomes an integrated financial intermediary, active not only in the provision of credit but also in the placement and management of savings[44].

With the entry into force of the TUF, stability is no longer pursued through administrative limits on operations, but through a coordinated set of transparency requirements, organisational safeguards suited to risk control and managerial responsibilities effectively attributable to internal bodies. The 1998 reform affects the very function of savings allocation, entrusting the supervision of financial intermediaries with the objectives of “safeguarding confidence in the financial system” and “the stability and proper functioning of the financial system” (Article 5, paragraph 1). In this framework, the distribution of responsibilities between the Bank of Italy and Consob – the former responsible for risk containment and sound and prudent management, the latter for transparency and fair conduct (Article 5, paragraphs 2–3) – reflects a systemic conception of financial intermediation. Article 21 of the TUF reinforces this logic, providing that, in the provision of investment services, intermediaries must operate “with diligence, fairness and transparency, in the best interests of clients and the integrity of markets,” with “resources and procedures […] adequate to ensure the efficient performance” of their activities (Article 21, paragraph 1). The bank is no longer an alternative to the market, but a component of the financial system’s allocation infrastructure, contributing to price formation and the channelling of savings towards productive investment. The resulting framework ensures stability through risk management and market integrity through transparency.

Ultimately, the transformation of banking governance between the 1980s and the late 1990s can be read as a gradual transition from a model based on public credit management to a structure in which stability is entrusted to technical risk regulation and behavioural transparency. Banks are no longer instruments of economic policy, nor merely market enterprises, but institutional hubs for the allocation of savings, whose legitimacy depends on their ability to combine managerial autonomy with systemic responsibility. However, the full implementation of this model presupposes a regulatory framework consistent with the increasing integration of financial markets. It is precisely in this area – the adequacy of national regulation in light of the progressive Europeanisation of finance – that tensions emerged in the early 2000s, leading first to the Lamfalussy architecture and, subsequently, to the construction of the Banking Union.

4. The early 2000s marked the start of the so-called Lamfalussy process, which was intended to radically redefine the methods of producing, coordinating and applying European financial regulation, laying the institutional foundations for the subsequent Banking Union. The Report of the Committee of Wise Men on the Regulation of European Securities Markets (15 February 2001) – known as the Lamfalussy Report, after the Committee’s chairman Alexandre Lamfalussy – noted the “malfunctioning” of the regulatory framework then in force and its structural shortcomings, highlighting the inadequacy of European legislation to keep pace with financial innovation and cross-border market integration. The Committee began from the observation of a growing asymmetry between the speed and complexity of market transformation and the slowness of Community legislative procedures, which were still based on minimum-harmonisation directives and lengthy decision-making processes requiring broad political agreement. This imbalance produced, as the Report noted, “common rules, diverging outcomes”: a framework of formally uniform legislation applied and interpreted differently at national level[45].

The proposed solution was neither the federal centralisation of supervision nor the preservation of the existing intergovernmental system, but the construction of a multi-level architecture structured on four levels: (i) general regulatory principles defined by the European legislator; (ii) flexible technical measures adopted by committees of regulators; (iii) coordination and convergence between national supervisory authorities – later to evolve into the European Supervisory Authorities and, for banking, into the European Banking Authority; (iv) enforcement instruments aimed at ensuring the uniform interpretation and application of rules. The Lamfalussy method is therefore not merely a procedural innovation, but a transformation of the regulatory paradigm: the focus shifts from the substantive discipline of activities to the rationality of intermediaries’ internal decision-making processes. From the point of view of the European economic order, this marks a further shift in the centre of gravity of stability: it is no longer grounded in the administrative protection of credit or solely in the capitalisation of intermediaries, but in the consistency between governance structures, risk management capabilities and the degree of market integration. Banks are thus recognised as systemic financial institutions, in which decision-making procedures, internal controls and risk governance functions acquire public relevance, becoming constituent elements of the European economic constitution.

However, the Lamfalussy architecture remained anchored in a logic of coordination between national authorities, without altering the allocation of supervisory and crisis management powers, which continued to lie with the Member States. Nor did it produce an equally significant transformation in banking business models. In most European systems – and in Italy in particular – intermediation continued to be based on lending relationships with businesses, with highly concentrated portfolios and capital structures not always adequate to absorb systemic shocks. A structural misalignment thus emerged between, on the one hand, an increasingly sophisticated and multi-level supervisory framework and, on the other, intermediaries characterised by strong exposure to domestic risk, low capitalisation and significant disparities in asset quality. This asymmetry proved decisive when, between 2007 and 2012, the global financial crisis and the subsequent sovereign debt crisis revealed the systemic interdependence of the European banking sector and the vicious circle between banking risk and sovereign risk (the so-called doom loop), making it clear that financial stability could no longer be guaranteed within national jurisdictions[46] .

The outbreak of the subprime mortgage crisis in the United States (2007) and the subsequent global financial crisis quickly exposed the structural fragility of the European banking system. The transmission of shocks through interbank markets and the deterioration of credit quality highlighted the gap between increasingly sophisticated regulation and the actual capital weakness of many intermediaries, particularly in those systems – such as Italy’s – characterised by concentrated credit portfolios and structurally low levels of capitalisation. This confirmed the inherent limitation of the Lamfalussy model: integrated markets, fragmented supervision; transnational risks, national intervention tools.

In the early years of the crisis, the response of Member States was based mainly on direct public intervention – recapitalisation, liquidity guarantees and selective nationalisation – aimed at containing systemic contagion. Between 2008 and 2012, European governments mobilised more than €1.6 trillion in support measures for the banking sector. Crisis management in the 2008–2012 period was dominated by the logic of bail-outs, i.e., public intervention aimed at supporting the solvency of intermediaries[47]. Although this approach was intended to contain systemic contagion, it entailed very high macroeconomic and institutional costs: the transfer of banking risk onto sovereign balance sheets fuelled the feedback loop between fiscal fragility and financial fragility, making it clear that banking stability could no longer be guaranteed through national resources alone, especially within a monetary union without a federal budget.

In response to this dynamic, the international prudential reform introduced by Basel III (approved in 2010 and phased in from 2013) marked a conceptual break with the previous model: stability was no longer entrusted solely to administrative supervision, but to the capital resilience of intermediaries, through more stringent requirements on common equity tier 1 (CET1), the introduction of countercyclical buffers and leverage and liquidity indicators (LCR, NSFR). At the same time, the European Union adopted a new regime for bank crisis management; as noted in doctrine, European regulators were “attempting to challenge aspects of business that are contrary to the public interest”, while avoiding “overly interfering with the freedom to generate wealth”. The crisis therefore required a critical reassessment of corporate governance models, questioning their ability to ensure the organisational and operational resilience of intermediaries in the face of systemic shocks.

Firstly, European regulatory interventions resulted in the strengthening of the organisational structure of banks. Directive 2000/12/EC, later reformulated in Directive 2013/36/EU (CRD IV), required the adoption of corporate governance arrangements based on clear and transparent lines of responsibility, effective procedures for risk identification and management, and internal reporting mechanisms capable of ensuring the verifiability and traceability of decision-making processes. Corporate governance is no longer conceived as a merely formal architecture, but as the structure responsible for ensuring consistency between strategy, risk and operational sustainability. Secondly, the EU redefined the bank crisis management regime. Directive 2014/59/EU (BRRD) and Regulation (EU) No 806/2014 (SRM) introduced a resolution model based on the bail-in principle, moving beyond the logic of public bailouts experienced in the early stages of the crisis. Losses are no longer transferred to sovereign balance sheets, but are allocated primarily to shareholders and subordinated creditors; public intervention, where necessary, becomes residual and subsidiary; resolution procedures are uniform and centralised[48].

The integration of prudential rules and crisis management tools introduced with the new European framework made the activation of resolution measures conditional on the breach of specific capital and organisational requirements. This choice, consistent with the principle that governance arrangements must be proportionate “taking into account the nature, scale and complexity of the institutions’ activities” (recital 54 of CRD IV), marked a shift in the regulatory paradigm[49]: stability was no longer ensured through formal compliance, but through the intermediary’s effective ability to monitor risk and ensure the consistency of internal decision-making processes. However, the transition from the public bail-out model to the internal loss absorption regime (bail-in) quickly highlighted significant tensions. The cases of the four banks resolved[50] in 2015 and the subsequent compulsory liquidation of Banca Popolare di Vicenza and Veneto Banca in 2017 showed how the new framework affected distributive dynamics[51]: the allocation of losses to shareholders and creditors, while consistent with the principle of internal responsibility, was perceived as destabilising in the local contexts involved. The subsequent revision of the BRRD and the SRM represented, in fact, an acknowledgement of the limitations of the original framework, which had failed to achieve either full legal convergence or uniform management of banking crises within the Union.

This led to a profound redefinition of the bank as a systemic actor: no longer a presumed recipient of public support, but a financial enterprise whose capital structure, internal controls and risk management procedures are of public importance, insofar as they constitute essential elements of the European economic order. However, the introduction of the bail-in highlighted an institutional tension that remains unresolved, because the crisis framework is now defined at European level, while the capacity for intervention remains largely anchored to the fiscal resources of Member States. This meant that banks operating in integrated markets continued to depend, in the event of failure, on the financial strength of their home jurisdiction.

In June 2012, at the height of the sovereign debt crisis, the Four Presidents’ Report (Van Rompuy, Barroso, Draghi, Juncker, Towards a Genuine Economic and Monetary Union, 2012) identified the fragmentation of national banking systems as one of the main sources of vulnerability in the euro area, emphasising the need for a supranational recomposition of the interest in stability. In the absence of common supervisory and crisis management instruments, the single currency lacked an institutional infrastructure capable of ensuring the orderly functioning of financial intermediation; the solvency of banks continued to depend on national public finances and, conversely, fiscal sustainability was conditioned by the potential costs of supporting the banking sector. Financial stability was thus trapped in a vicious circle between banking risk and sovereign risk, revealing the unfinished nature of Economic and Monetary Union.

The Banking Union was therefore conceived not as a market liberalisation project, but as a tool for systemic risk containment, aimed at defusing the bank–sovereign nexus and returning the stabilisation function to a genuinely European level. The first pillar was the Single Supervisory Mechanism (SSM), operational since November 2014, which assigned the European Central Bank direct supervision over significant credit institutions and indirect supervision over less significant entities through structured cooperation with national authorities. The rationale was not full centralisation, but the unification of prudential reasoning: breaking the proximity link between supervisor and supervised, reducing the scope for regulatory forbearance, and harmonising risk assessment methodologies and internal models. Supervision thus became a European function not because it was subtracted from the Member States, but because it was reconfigured within a shared technical framework[52].

The second pillar, the Single Resolution Mechanism (SRM), operational since 2016, intervened in the orderly management of banking crises. Directive 2014/59/EU (BRRD) introduced the bail-in principle, according to which losses are absorbed primarily by shareholders and creditors before any external intervention, while the Single Resolution Fund progressively replaced domestic support mechanisms. This innovation marked a clear break with the European tradition of public bailouts, transforming the management of banking crises from an administrative event into a legal procedure of financial accountability. While deposits up to €100,000 remain fully guaranteed, protection above this threshold follows the creditor hierarchy defined at European level, reflecting the aim of consolidating uniform rules on the allocation of losses and the distribution of the consequences of insolvency.

The third pillar, the European Deposit Insurance Scheme (EDIS), proposed by the Commission in 2015, remains the missing component of the institutional framework. Its purpose is to make the security of deposits independent of the Member State in which a bank operates, through a common fund subject to progressive mutualisation. However, its implementation has been slowed by political resistance, particularly from Member States concerned about the potential socialisation of risks across banking systems characterised by different asset quality levels. Germany and several Nordic countries have made participation in EDIS conditional upon prior risk reduction, including the containment of non-performing loans and the diversification of sovereign exposures. Yet a single currency presupposes a uniform degree of confidence in deposit protection regardless of national jurisdiction; the absence of a common deposit guarantee therefore leaves unresolved a structural vulnerability in the euro area.

The Banking Union therefore represents an innovative institutional response to a crisis that revealed the inherently systemic nature of banking in the euro area. It has Europeanised supervision and orderly crisis management, recognising that financial stability can no longer be entrusted to exclusively national instruments and responsibilities in a context of integrated markets. However, the failure to implement the third pillar – the European Deposit Insurance Scheme – renders the Banking Union structurally incomplete. Supervision and resolution have been brought to the supranational level, but the ultimate protection of deposits remains grounded in national fiscal capacities: this is where the bank–sovereign nexus persists. The incompleteness of the Banking Union thus reflects a deeper asymmetry in the architecture of Economic and Monetary Union, insofar as market integration has not been matched by an equivalent integration of stabilisation and risk-sharing instruments. Supervision is European, fiscal responsibility remains national; the common regulatory framework governs crises, but not yet confidence. The result is an asymmetrical governance structure in which the logic of discipline has been Europeanised more rapidly than the logic of solidarity[53] .

In this sense, the question of EDIS is not a technical detail, but the point at which the political nature of Monetary Union is tested. If the single currency presupposes a single infrastructure of trust, as indicated in the Five Presidents’ Report (2015), the persistence of national deposit guarantee schemes reproduces the very bank–sovereign circuit that the Banking Union was intended to dismantle. Stability thus acquires a European form but retains a national substance. The Banking Union is therefore not a point of arrival, but an open institutional construction site, in which it is decided whether the European Union intends to be merely an integrated financial market or a monetary area endowed with its own shared infrastructure of confidence.

The issue is no longer technical, but political: it concerns the definition of a European public interest in finance. Ultimately, the completeness of the Banking Union measures the Union’s capacity to transform economic integration into institutional integration. It is in this still unresolved tension that the future of financial stability in the euro area is at stake.

5. The reconstruction carried out over the historical period considered allows us to recognise a profound continuity in the configuration of banking governance: the bank appears as an institution situated at the intersection of private autonomy and public interest, whose primary function is to make possible the circulation of credit as a constitutive condition of collective economic life.

Since the 1936 model, credit has been recognised as an essential function for coordinating the economy rather than a normal activity subject solely to the rules of competition, with banks conceived as components of the institutional architecture of development and stability ensured through structural supervision aimed at preserving overall balance, including by limiting the autonomy of intermediaries; however, the opening of markets and the increasing mobility of capital gradually rendered this arrangement inadequate, and the transformation of banks into joint-stock companies together with the affirmation of sound and prudent management marked the passage to a model in which stability is based on the intermediary’s capacity to manage risk through adequate capital, internal controls and consistent decision-making processes, so that the continuity of critical functions is no longer guaranteed externally but originates within the very structure of banking governance, although the crisis of 2007–2012 demonstrated the limits of this evolution, insofar as risk cannot be confined to individual intermediaries but propagates through the interdependencies between banks, markets and public finances, assuming the form of systemic vulnerability that neither private responsibility nor national intervention alone are capable of containing.

Recognition of the systemic nature of the vulnerability revealed by the crisis made it necessary to establish an institutional guarantee beyond the national level, leading to the creation of the Banking Union, through which the Single Supervisory Mechanism and the Single Resolution Mechanism assigned the function of safeguarding stability to the supranational level in the awareness that the scale of risk and the scale of responsibility no longer coincide; however, the architecture remains incomplete, since the absence of a common deposit guarantee scheme leaves the ultimate protection of confidence anchored to the fiscal capacity of Member States, reproducing a divide between financial integration and fiscal sovereignty and producing a structural paradox whereby banking markets operate as integrated networks while the ultimate guarantee of deposits – and thus systemic stability – remains national, so that the Banking Union has Europeanised supervision and resolution without Europeanising the final responsibility for intermediation, leaving unresolved the question of how systemic risk is definitively allocated within the euro area.

This reconstruction clearly shows that banks cannot be interpreted either as private entities endowed with autonomous decision-making power or as mere administrative instruments of the state. Their nature is intrinsically hybrid: they perform an economic activity that produces a collective outcome – trust – which no other actor can generate or sustain. It follows that banking governance cannot be reduced to a market regulation technique, but represents the institutional form through which the relationship between private interest and the economic public order is composed. Stability is not the spontaneous result of individual optimisation, but the outcome of the consistency between the responsibilities of intermediaries, supervisory arrangements and the ultimate guarantee of the system: it depends, in other words, on an architecture of distributed responsibilities that must be continuously constructed, monitored and recalibrated.

Furthermore, the most recent transformation of financial intermediation structures makes it clear that the issue of stability is not a definitively resolved problem. The emergence of new organisational models – FinTech platforms, non-bank intermediaries, and highly integrated digital ecosystems that combine data management, payment infrastructures and predictive capabilities – does not merely introduce additional competitors into an existing market[54]. Competition today concerns not only products and cost structures, but also the control of the conditions under which trust is generated, maintained and operationalised.

In the traditional model of credit intermediation, trust was rooted in the relationship between bank and borrower, where risk assessment incorporated qualitative, territorial and reputational information. This relationship was made institutionally reliable by the intermediary’s subjection to public supervision, capital adequacy requirements and formalised crisis management procedures. Credit decisions were therefore traceable, accountable and attributable to a clearly identifiable centre of responsibility. In contrast, digital models profoundly alter this configuration. Risk assessment is increasingly mediated by scoring algorithms that rely on behavioural and transactional data, often gathered outside traditional banking channels. Trust is no longer generated through relationships, reciprocity or credit history, but through statistical correlations derived from potentially opaque streams of information. In this setting, the decision cannot be traced back to a single responsible entity, but emerges from distributed computational chains, frequently located across different jurisdictions and governed by heterogeneous legal regimes. The result is a potential displacement of economic trust towards decision-making structures that are not immediately governable and not necessarily aligned with the principles of sound and prudent management.

The institutional issue that arises from this concerns the continuity of responsibility. In the traditional banking model, stability is ensured by the traceability of decisions to a single entity that is subject to supervision and required to guarantee the financial and organisational soundness of its operations. In digital systems, by contrast, responsibility is fragmented: decision-making is delegated to algorithmic processes, the platform manages the infrastructure, the user provides the data, while the ultimate guarantee of risk remains indeterminate. This fragmentation produces a structural tension between allocative efficiency and the institutional legitimacy of economic decisions.

The question that arises is therefore the same one that has run through the entire history of banking governance, but today it takes on a new form: who guarantees trust in the contemporary financial economy? If the public institution bank guaranteed stability through state intervention, and the corporate bank did so through risk capitalisation and sound and prudent management, algorithmic finance seems to reintroduce a regime in which trust is produced by automated procedures and probabilistic models, without a clearly identifiable centre of responsibility.

In this sense, the challenge facing the European legal system is not simply the completion of the Banking Union in the strict sense, but the extension of its institutional logic to the digital sphere of intermediation. If Europe has recognised that banking stability cannot be guaranteed within national borders, it must now recognise that the stability of trust cannot be left to the contingent opacity of platforms. The question is not whether digital technologies will replace banks, but how to bring the production of trust back within a framework of institutional responsibility consistent with economic and monetary integration.

Financial stability is not a given, but a construct. Similarly, trust is not a neutral by-product of technological innovation, but a political resource whose protection requires shared forms of governance. If the currency is single and the markets are integrated, trust must be as well. Only an institutional architecture capable of reconciling entrepreneurial autonomy, financial integration and public accountability can guarantee the continuity of the credit function in the contemporary economy.

Authors:

Natividad Araque Hontangas is Professor of Economic History and Institutions at the University of Castilla-La Mancha.

Rita Mascolo is Lecturer in Economic History at LUISS University of Rome,

The article comes from a joint stydy of the Authors; however, Nativitad Araque Hontangas wrote paragraphs 1-6 and Rita Mascolo wrote paragraphs 2-3-4-5.

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[1] A. von Leyser, Meditationes ad Pandectas, Gegel, Lipsia, 1778, vol. VII, p. 964. Translation (literal): “The circulation of exchange in commerce is what the circulation of blood is in the human body. Just as the body is sustained by circulation and, once it is interrupted, weakens and decays, so commerce cannot flourish if the circulation of exchange is removed”.

[2] On this topic, see in particular: Y. Cassis – R. S. Grossman – C. Schenk (eds.), The Oxford Handbook of Banking and Financial History, Oxford University Press, Oxford, 2016; A. N. Berger – P. Molyneux – J. O. S. Wilson (eds.), The Oxford Handbook of Banking, Oxford University Press, Oxford, 2012.

[3] On the Italian case in the interwar period, see: M. Molteni – D. Pellegrino, “The establishment of banking supervision in Italy: an assessment (1926–1936),” Business History, 66(6), 2024, pp. 1442–1470; F. Barbiellini Amidei – C. Giordano, “The redesign of the bank–industry–financial market ties in the US Glass–Steagall and the 1936 Italian banking acts,” in P. Clement – H. James – H. van der Wee (eds.), Financial Innovation, Regulation and Crises in History, Routledge, London–New York, 2015, pp. 65–83; M. Molteni, Bank Failures: What Failure? Distress, Development, and Supervision in Italian Banking, 1926–1936, PhD diss., University of Oxford, 2021.

[4] On the Italian bank privatization process, see: W. L. Megginson, “The Economics of Bank Privatization,” Journal of Banking & Finance, 29(8–9), 2005, pp. 1931–1980; M. Pradhan, “Privatization and the Development of Financial Markets in Italy,” Finance & Development, 32(4), 1995, p. 9; A. Goldstein, “Privatization in Italy, 1993–2003: Goals, Institutions, Outcomes, and Outstanding Issues,” in M. Köthenbürger – H.-W. Sinn – J. Whalley (eds.), Privatization Experiences in the European Union, Routledge, London–New York, 2006, pp. 225–252; W. L. Megginson – D. Scannapieco, “The Financial and Economic Lessons of Italy’s Privatization Program,” in D. H. Chew – S. L. Gillan (eds.), Global Corporate Governance, Columbia University Press, New York–Chichester (West Sussex), 2009, pp. 177–195.

[5] On the European Banking Union, see: J. Pisani-Ferry et al., What Kind of European Banking Union?, Bruegel Policy Contribution, No. 2012/12, 2012; N. Moloney, “European Banking Union: Assessing Its Risks and Resilience,” Common Market Law Review, 51(6), 2014, pp. 1–49; G. Boccuzzi, The European Banking Union: Supervision and Resolution, Springer, 2016.

[6] See, among others: Cohen, Italia (1861-1914), in D. Cameron (ed.), Le banche e lo sviluppo del sistema industriale, il Mulino, Bologna, 1976; Capriglione, I consorzi bancari e la legge sulla ristrutturazione finanziaria delle imprese, Giuffrè, Milan, 1979, cap. II; Id., Evoluzione del rapporto finanza–industria: dalla legge del 1936 al d.lgs. n. 385/93, in V. Mezzacapo (ed.), Studi sulla nuova legge bancaria, Bancaria Editrice, Rome, 1994, p. 117 ff.

[7] For a historical perspective, see: G. Guarino – G. Toniolo (eds.), La Banca d’Italia e il sistema bancario 1919–1936, Laterz, Rome–Bari, 1993, p. 69 ff.; G. Toniolo, Crisi economica e smobilizzo pubblico delle banche miste (1930–1934), in Id. (ed.), Industria e banca nella grande crisi 1929–1934, Milan, 1978; R. S. Grossman, Unsettled Account: The Evolution of Banking in the Industrialized World since 1800, Princeton University Press, Princeton, 2010; L. Cafagna, La formazione di una «base industriale» fra il 1896 e il 1914, in L. Caracciolo (ed.), La formazione dell’Italia industriale, Laterza, Rome–Bari, 1969, p. 137 ff.; A. M. Biscaini Cotula, “Banca e industria tra le due guerre,” Quaderni storici, 16(47/2), 1981, pp. 748–751.

[8] F. Confalonieri, Banche miste e grande industria in Italia 1914–1933, Turin, Einaudi, 1974; and for the theoretical interpretation of banks as “institutional substitutes” in late industrialization processes, A. Gerschenkron, Economic Backwardness in Historical Perspective, Harvard University Press, Cambridge (MA), 1962.

[9] R. Mattioli, “I problemi attuali del credito,” Mondo economico, 2, 1962, p. 28.

[10] M. Friedman – A. J. Schwartz, A Monetary History of the United States, 1867–1960, Princeton University Press, Princeton, 1963, cap. VII; E. N. White, “A Reinterpretation of the Banking Crisis of 1930,” The Journal of Economic History, 44(1), 1984, pp. 119–138.

[11] For further references, see: G. Setti, “La tutela del risparmio e la disciplina della funzione creditizia nella legislazione straniera,” Rivista bancaria, 1937, nn. 1–3; R. R. Chaudhuri, The Great Depression and the Glass–Steagall Act, in Id., The Changing Face of American Banking, Palgrave Macmillan, New York, 2014, pp. 71–82; H. James, The German Slump: Politics and Economics 1924–1936, Clarendon Press, Oxford, 1986; G. Vanthemsche, “L’élaboration de l’arrêté royal sur le contrôle bancaire (1935),” Belgisch Tijdschrift voor Nieuwste Geschiedenis, 3, 1980, pp. 389–437.

[12] The Istituto Mobiliare Italiano (IMI) was established by Royal Decree-Law of 13 November 1931, No. 1578, as a public institution specialized in medium- and long-term credit; it was incorporated into Sanpaolo in 1998 as part of the broader privatization of the Italian banking sector. The Istituto per la Ricostruzione Industriale (IRI) was created by Royal Decree-Law of 12 February 1933, No. 201, as a state-owned holding company for the management of banking and industrial shareholdings; having become, in the postwar decades, the central pillar of state ownership in the Italian economy, it was placed into liquidation in 2000 and formally abolished in 2009. For systematic analyses, see the multi-volume series Storia dell’IRI (Laterza): V. Castronovo, Storia dell’IRI. Dalle origini al dopoguerra, vol. 1, 2013; F. Amatori (ed.), Storia dell’IRI. Il «miracolo» economico e il ruolo dell’IRI, vol. 2, 2013; S. Francesco, Storia dell’IRI. I difficili anni ’70 e i tentativi di rilancio negli anni ’80, vol. 3, 2013; R. Artoni (ed.), Storia dell’IRI. Crisi e privatizzazione, vol. 4, 2014; F. Russolillo (ed.), Storia dell’IRI. Un gruppo singolare. Settori, bilanci, presenza nell’economia italiana, vol. 5, 2015; P. Ciocca, Storia dell’IRI. L’IRI nella economia italiana, vol. 6, 2015.

[13] G. Conti, “Fallimenti di mercato e fallimenti di regolazione prima della legge bancaria del 1936,” Mercato Concorrenza Regole, 3, 2011, pp. 521–548.

[14] F. Capriglione – A. Sacco Ginevri, Metamorfosi della governance bancaria, UTET Giuridica, Turin, 2019, pp. 4–16. This reformist approach took shape within a complex framework of administrative regulation of credit. The system relied on three institutions: the Ispettorato per la difesa del risparmio e per l’esercizio del credito (Inspectorate for the Protection of Savings and for the Exercise of Credit), the Committee of Ministers, and the Central Corporative Committee. The Ispettorato was entrusted with supervisory functions (“protection of savings and control over the exercise of credit,” art. 11, Royal Decree-Law 12 March 1936, No. 375), and operated under the authority of the Committee of Ministers, which defined the general policy guidelines for credit governance, subject to the prior opinion of the Central Corporative Committee (art. 13). Regulatory authority thus derived from the coordination between political direction and administrative implementation: decisions of the Committee of Ministers were translated into operational measures through the Ispettorato, which acted as its technical and executive arm.

[15] Cf. L. Torchia, Il controllo pubblico della finanza privata, CEDAM, Padua, 1992, p. 167 ff., for a critique of the interpretation advanced by G. Porzio, Autonomia ed eteronomia nella gestione dell’impresa bancaria, in Atti del convegno “Il sistema creditizio italiano tra autonomia e autorità nella prospettiva del mercato unico europeo”, Perugia, 1989, which maintains that the supervisory framework established in 1936 was characterized by an indeterminacy of its regulatory purposes.

[16] R. Costi, “La legge bancaria del 1936,” Banca Impresa Società, 31(3), 2012, pp. 349–364; G. La Rocca, “Contratto e interesse pubblico: premesse politiche e ricadute giusprivatistiche della legge bancaria del 1936,” Rivista di Diritto Bancario, luglio–settembre 2023, pp. 515–559.

[17] G. Carli, Intervento all’Assemblea ordinaria dell’ABI, Rome, 29 febbraio 1968, in Banca d’Italia (ed.), Scritti e conferenze, vol. III, p. 249 ff.; F. Capriglione, Nuova finanza e sistema bancario, UTET, Turin, 2016, p. 48.

[18] M. S. Giannini, “Controllo: nozioni e problemi,” Rivista trimestrale di diritto pubblico, 1974, pp. 1263 ff.

[19] A. Onado, “L’attacco alla Banca d’Italia e la politica di vigilanza,” Politica ed economia, giugno–luglio 1978.

[20] Cf. G. Mazzarolli, Ingerenza della Banca d’Italia nell’organizzazione delle aziende di credito, in AA.VV., I controlli bancari (Atti del convegno di Camogli, 12–14 maggio 1977), Napoli, 1978, p. 347; F. Capriglione, L’impresa bancaria tra controllo e autonomia, Giuffrè, Milan, 1983, p. 65, for differing views in the legal literature on the scope and legitimacy of supervisory intervention in bank management.

[21] F. Parrillo, “Dalla cultura della separatezza alla banca universale,” Rivista Bancaria. Minerva Bancaria, 2, 1993, pp. 10–11.

[22] Sul miracolo economico italiano vedi: V. Castronovo, L’Italia del miracolo economico, Laterza, Rome-Bari, 2014.

[23] E. Helleiner, “Explaining the globalization of financial markets: bringing states back in,” Review of International Political Economy, 2(2), 1995, pp. 315–341; A. Busch, Banking Regulation and Globalization, Oxford University Press, Oxford, 2009; A. Sheng, Bank Restructuring: Lessons from the 1980s, Washington, World Bank, 1996.

[24] M. Knight, “Developing countries and the globalization of financial markets,” World Development, 26(7), 1998, pp. 1185–1200; E. Prasad – K. Rogoff – S. J. Wei – M. A. Kose, Effects of Financial Globalization on Developing Countries: Some Empirical Evidence, IMF Occasional Paper, No. 220, 2003.

[25] For example, during the 1960s and 1970s, American, Japanese, and European intermediaries significantly expanded their international operations, both through the establishment of foreign branches and through specialized desks within parent companies. This expansion inevitably entailed exposure to new categories of risk. Alongside traditional credit and interest rate risks, exchange rate risk – heightened by currency volatility following the collapse of the Bretton Woods system – and country risk – linked to the economic and political stability of debtor states – became increasingly prominent. In the absence of coordinated international supervision, these risks accumulated beyond the scope of national control mechanisms, contributing to the emergence of a transnational financial sphere that was not yet equipped with adequate institutional safeguards, in M. Onado (ed.), La banca come impresa, Il Mulino, Bologna, 1996, p. 67.

[26] M. Onado, “La vigilanza sull’attività bancaria internazionale,” Banca Impresa e Società, 1, 1984, p. 4; N. Irti, “Le categorie giuridiche della globalizzazione,” Rivista di diritto civile, I, 2003, p. 625; F. Galgano, La globalizzazione nello specchio del diritto, Il Mulino, Bologna, 2005; A. Drach, “A globalization laboratory: European banking regulation and global capitalism in the 1970s and early 1980s,” in Rethinking European Integration History in Light of Capitalism, Routledge, 2022, pp. 106–126.

[27] F. Capriglione – A. Sacco Ginevri, Metamorfosi della governance bancaria, UTET Giuridica, Turin, 2019, pp. 44–45.

[28] Cf. R. Costi, L’ordinamento bancario, il Mulino, Bologna, 1986, p. 206 ff.; F. Capriglione, “Costituzione di banche e rapporto banca–industria,” Banca e borsa, I, 1988; A. Patroni Griffi, “Accesso all’attività bancaria,” Banca e borsa, I, 1990, pp. 457 ff.

[29] A. Patroni Griffi, “Riflessioni sulla seconda direttiva comunitaria,” Banca Impresa Società, 1991, p. 419.

[30] Cf. Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards: A Revised Framework (Comprehensive Version), June 2006; Basel Committee on Banking Supervision, “International Agreement on the Assessment of Capital and Minimum Capital Requirements,” Bollettino economico della Banca d’Italia, 1988.

[31] S. Battini (ed.), La regolamentazione globale dei mercati finanziari, Giuffrè, Milan, 2007, p. 3.

[32] The first Basel Accord, International Convergence of Capital Measurement and Capital Standards (1988), established a minimum capital ratio of 8% of risk-weighted assets, with gradual implementation beginning in 1992. In this phase, risk measurement focused almost exclusively on credit risk, addressed through a standardized taxonomy of counterparties (risk weights of 0%, 20%, 50%, 100%), irrespective of the actual quality of the loan portfolio and of banks’ internal capacity to estimate default probabilities. Regulatory capital was divided into core capital (Tier 1) and supplementary instruments (Tier 2), with quantitative limits on the latter. Only later, with the Amendment to the Capital Accord to Incorporate Market Risks (1996), was market risk incorporated, calculated through internal models based on Value at Risk (VaR), marking the first regulatory recognition of proprietary risk-measurement systems.

The 2004 Revised Framework (International Convergence of Capital Measurement and Capital Standards: A Revised Framework), updated in 2005 and consolidated in 2006 (Basel II), systematically broadened the scope of relevant risks. Under Pillar 1, total risk to be covered by regulatory capital was divided into credit risk, market risk, and operational risk. For credit risk, weighting could derive not only from standardized methodologies but also from internal probabilistic models (Internal Ratings-Based Approach) relying on probability of default, loss given default, and effective maturity. For operational risk, methodologies of increasing complexity (Basic Indicator Approach, Standardised Approach, Advanced Measurement Approaches) were introduced, based on correlations between business volumes and expected loss profiles. Pillar 2 introduced continuous prudential assessment (Supervisory Review Process), through which the authority verifies the consistency between total risk exposure and available capital, imposing capital adjustments or organizational changes where coverage proves insufficient. Pillar 3, founded on disclosure obligations, assigned market discipline a role of external oversight over the intermediary’s overall soundness.

The transition from Basel I to Basel II thus entailed a structural shift: stability was no longer ensured through a uniform quantitative capital requirement, but through the institution’s ability to measure, monitor, and manage credit, market, and operational risks in accordance with its internal control framework and strategic capital-allocation choices.

[33] M. T. Salvemini, “L’indipendenza della Banca centrale e il ‘divorzio’ tra Banca d’Italia e Tesoro,” il Mulino. Rivista trimestrale di cultura e politica, 5, 2008, pp. 947–958.

[34] For further discussion, see: C. D’Adda, “‘Divorzio’ tra Banca d’Italia e Tesoro: frutto di una preziosa intesa,” in Carlo Azeglio Ciampi Governatore della Banca d’Italia, 2019, p. 69; C. Maciocco – F. Masini, “Indipendenza della banca centrale e politica monetaria: note sul dibattito intorno al ‘divorzio’ fra Banca d’Italia e Tesoro,” Annali della Facoltà di Economia di Cagliari, 23, FrancoAngeli, 2007, pp. 75–91; L. Tedoldi, “Il ‘divorzio’ tra la Banca d’Italia e il Tesoro del 1981: la questione politico-istituzionale,” Studi e Ricerche sull’Università, 2020, pp. 407–416.

[35] V. Troiano, Le banche, in F. Capriglione (ed.), Manuale di diritto bancario e finanziario, CEDAM, Padua, 2015, p. 320.

[36] Cf. A. Piermarini, “Il patrimonio delle banche italiane nella valutazione delle autorità di vigilanza,” Il Risparmio, 1996, pp. 375 ff.; S. Cassese, “Il riordino delle banche pubbliche,” Banca e borsa, I, 1984, pp. 85 ff.; F. Merusi, “La ricapitalizzazione delle banche pubbliche,” Banca e borsa, I, 1983, pp. 169 ff.; R. Masera, “Banca universale e gruppo creditizio: sollecitazioni di mercato e disciplina prudenziale,” Economia Italiana, 3, 1992, pp. 371–372; G. Sapelli, “Banche e storia d’Italia,” Mestiere di storico, 1, 2009, pp. 1000–1004; F. Capriglione, L’ordinamento finanziario verso la neutralità, CEDAM, Padua, 1994.

[37] Cf. G. Sapelli, “Banche e storia d’Italia,” Mestiere di storico. Rivista della Società italiana per lo studio della storia contemporanea, I, 1, 2009, pp. 1000–1004; F. Capriglione, L’ordinamento finanziario verso la neutralità, Padua, CEDAM, 1994. 

[38] On the transformation of the role of the State and the reconfiguration of the bank from an infrastructure of industrial development to a financial enterprise disciplined by market logics, see: A. Graziani, Lo sviluppo dell’economia italiana. Dalla ricostruzione alla moneta europea, Bollati Boringhieri, Turin, 2000, esp. chs. 6–8; M. Messori, Il potere delle banche. Sistema finanziario e imprese, Egea, Milan, 2007.

[39] [39] S. La Francesca, Storia del sistema bancario italiano, il Mulino, Bologna, 2004, p. 267.

[40] On the systemic framework introduced by the TUB and the ordering role of Article 5, see M. Porzio, Testo unico bancario. Commentario, Giuffrè, Milan, 2010.

[41] See: V. Sanasi d’Arpe. La natura giuridica delle fondazioni di origine bancaria. Vol. 27, Bari, Cacucci, 2013.

[42] M. Brogi, “Corporate governance bancaria e sana e prudente gestione,” Banca Impresa Società, 29(2), 2010, pp. 283–308.

[43] See: F. Vella, “Il nuovo diritto societario e la ‘governance’ bancaria,” Banca Impresa Società, 22(3), 2003, pp. 309–320; F. Magli – A. Nobolo, “Corporate Governance e sistema dualistico: alcune criticità nelle società per azioni bancarie,” in Corporate Governance: Governo, controllo e struttura finanziaria. Atti del Convegno 2008, il Mulino, Bologna, 2009.

[44] On the genesis, structure and systemic rationale of the Testo Unico della Finanza, see, among others: Annunziata, F. – Marchetti, P., Il Testo Unico della finanza: un bilancio dopo 15 anni, Egea, Milan, 2015; Fratini, M. – Gasparri, G., Il Testo Unico della finanza, UTET Giuridica, Turin, 2012; V. Calandra Buonaura – E. Amati (eds.), Commentario breve al Testo unico della finanza, Wolters Kluwer, Milan, 2020; Annunziata, F., La disciplina del mercato mobiliare, 10ª ed., Giappichelli, Turin, 2020.

[45] I. Maes, “Alexandre Lamfalussy and the origins of the BIS macro-prudential approach to financial stability,” PSL Quarterly Review, 63(254), 2010, pp. 263–290; C. De Visscher – O. Maiscocq – F. Varone, “The Lamfalussy reform in the EU securities markets: fiduciary relationships, policy effectiveness and balance of power,” Journal of Public Policy, 28(1), 2008, pp. 19–47.

[46] For the global financial crisis and its transmission to the European banking system, see, among others: M. Hellwig, “Systemic Risk in the Financial Sector: An Analysis of the Subprime-Mortgage Financial Crisis,” De Economist, 2010, pp. 129–207; G. Gorton, Slapped by the Invisible Hand. The Panic of 2007, Oxford University Press, Oxford, 2010; G. Gorton – A. Metrick, “Securitized Banking and the Run on Repo,” Journal of Financial Economics, 104(3), 2012, pp. 425–451; and on the link between banking crises and the sovereign debt crisis in the euro area, see: P. De Grauwe, The Governance of a Fragile Eurozone, CEPS Working Document, 2011; L. Bini Smaghi, Austerity: European Democracies against the Wall, Il Mulino, Bologna, 2013.

[47] J. Działo, “State aid in the European Union in the period of the economic crisis,” Comparative Economic Research. Central and Eastern Europe, 17(1), 2014, pp. 5–19; F. De Marco, “Bank lending and the European sovereign debt crisis,” Journal of Financial and Quantitative Analysis, 54(1), 2019, pp. 155–182.

[48] Compare with: E. Barucci – T. Colozza – C. Milani, “The effect of bank bail-outs in the EU,” Journal of International Money and Finance, 95, 2019, pp. 14–26; M. Dewatripont, “European banking: Bailout, bail-in and state aid control,” International Journal of Industrial Organization, 34, 2014, pp. 37–43; T. Keister – Y. Mitkov, “Bailouts, bail-ins and banking crises,” Memo presented at the Board of Governors of the Federal Reserve System, 2016; E. Avgouleas – C. Goodhart, “Critical reflections on bank bail-ins,” Journal of Financial Regulation, 1(1), 2015, pp. 3–29.

[49] See: F. Capriglione – R. Masera, “La corporate governance delle banche: per un paradigma diverso,” Rivista trimestrale di diritto dell’economia, I, 2016, pp. 296 ff., where the authors highlight the need for regulatory interventions aimed at fostering a different internal system of incentives and checks and balances, consistent with the orientation of post-crisis European regulation.

[50] The reference is to the measures adopted on 22 November 2015 pursuant to Decree-Law No. 183/2015 (converted into Law No. 208/2015), under which the Bank of Italy, acting as the National Resolution Authority, ordered the resolution of Banca delle Marche S.p.A., Banca Popolare dell’Etruria e del Lazio S.C., Cassa di Risparmio della Provincia di Chieti S.p.A., and Cassa di Risparmio di Ferrara S.p.A., in accordance with the framework introduced by Directive 2014/59/EU (BRRD). The intervention entailed the creation of four bridge institutions and the allocation of losses to shareholders and subordinated bondholders (burden sharing), in line with the bail-in principle. This was one of the first practical applications of the new bank crisis management regime in Italy, and it highlighted the challenges associated with the transition from a public rescue approach (bail-out) to a system based on internal loss absorption. See: F. Capriglione, “Luci ed ombre nel salvataggio di quattro banche in crisi,” Aperta Contrada, 17 February 2016; G. Lemma, “Razionalizzazione sistemica e risoluzione delle crisi bancarie (quando l’intervento autoritativo causa incertezza del diritto),” Rivista trimestrale di diritto dell’economia, II, 2016, pp. 128 ff.

[51] Compare with: F. Pellegrini, “Il caso delle banche venete: le contraddittorie opzioni delle Autorità europee e la problematica applicazione degli aiuti di Stato,” in La nuova regolazione post crisi tra difficoltà operative e ricerca di coerenza sistemica, Rivista trimestrale di diritto dell’economia, Supplemento al n. 3, 2017, pp. 107 ff.; G. Siclari, “Il caso delle ‘banche venete’ e i criteri di scelta tra risoluzione e liquidazione coatta amministrativa,” Rivista trimestrale di diritto dell’economia, Supplemento al n. 3, 2017, pp. 124 ff.; C. Urbani, “La cessione ex lege n. 121/2017 e la posizione degli azionisti delle due ‘banche venete’ poste in liquidazione coatta amministrativa,” Rivista trimestrale di diritto dell’economia, Supplemento al n. 3, 2017, pp. 190 ff.

[52] On the genesis and architecture of the European Banking Union, see: H. van Rompuy – J. M. Barroso – M. Draghi – J. C. Juncker, Towards a Genuine Economic and Monetary Union, European Council, Brussels, 2012; European Commission, Completing Europe’s Economic and Monetary Union. Report by Jean-Claude Juncker, in close cooperation with Donald Tusk, Jeroen Dijsselbloem, Mario Draghi and Martin Schulz (“Five Presidents’ Report”), Brussels, 22 June 2015; N. Véron, Europe’s Radical Banking Union, Bruegel Essay, Brussels, 2015; E. Wymeersch, “The Single Supervisory Mechanism: Institutional Framework and Challenges,” EBRD Law in Transition, 2014, pp. 98–117.

[53] K. C. Engelen, “Europe’s Forever Unfinished Banking Union,” The International Economy, 33(2), 2019, pp. 34–55; V. Colaert – G. Bens, “European deposit insurance system (EDIS): cornerstone of the banking union or dead end?,” in D. Busch – G. Ferrarini (eds.), European Banking Union, 2nd ed., Oxford University Press, Oxford, 2020; M. Clarich, “L’Unione bancaria: un progetto incompiuto?,” in Sfide per il diritto pubblico nel confronto italo–tedesco: federalismo e governance economica, Nomos, Baden-Baden, 2023; P. Rossi, “Profili critici di una Banking Union incompiuta,” Amministrazione in cammino, 2019, pp. 1–22.

[54] For further discussion: V. Lemma, FinTech Regulation: Exploring New Challenges of the Capital Markets Union, Springer International Publishing, Cham, 2020.