Statistical agencies and responses to financial crises: Eurostat, bad banks, and the ESM

<p>This article demonstrates the important role that the European statistical agency – Eurostat – plays in shaping tools for responding to banking crises. From 2009, Eurostat used its position as the interpreter of member state budget statistical rules to implement increasingly stringent rules for how financial crisis responses would affect public budgets. Rather than mere technical details, these rules affected crisis responses. Elected politicians, and especially those under bailout programmes, have strong incentives to minimise the direct budgetary effects of aiding failing financial institutions. By establishing and enforcing new rules about which crisis responses directly hit member state budgets and which did not, Eurostat created incentives to choose certain policies. The article explores this process by examining the creation of bad banks and the European Stability Mechanism. It makes an original contribution to both the study of the European banking union and the general role that statistical agencies can play in shaping crisis responses.