Hostname: page-component-6bb9c88b65-fsdjw Total loading time: 0 Render date: 2025-07-22T09:54:39.865Z Has data issue: false hasContentIssue false
  • English
  • Français

DISCRETION AND THE PUBLIC INTEREST: THE CASE OF THE EUROPEAN BANKING AUTHORITY

Published online by Cambridge University Press:  22 July 2025

Donato Vese Open the ORCID record for Donato Vese [Opens in a new window]
Donato Vese*
Affiliation:
MA in Law (Catholic University of Milan), PhD in Economics (Sant’Anna and IUSS University Schools), LLM in International and Comparative Law (Trinity College Dublin). Associate Professor in Law & Economics, University of Pisa, School of Law: donato.vese@unipi.it.; Professeur invite, Université Paris 1 Panthéon-Sorbonne, Institut de recherche juridique André Tunc: donato.vese@univ-paris1.fr. Academic Fellow, Scuola Normale Superiore Pisa: donato.vese@sns.it.
Get access

Abstract

This article argues that public interests fundamentally underpin the decision-making processes of the European supervisory authorities in the banking system and, through their extraordinary regulatory influence, contribute to shaping the discretionary powers, orienting them towards an adequate and effective legal protection of the individual and collective subjective spheres, whose interests are embodied in the legal sources and principles of the European legal order. The case of the European Banking Authority reflects this conceptual framework and could serve as a benchmark for European banking law.

Keywords

European banking and financial systemadministrative agenciesEuropean Banking Authoritybanking supervision functionsdiscretionary powerspublic interestprotection of rights

Information

Type
Articles
Information
The Cambridge Law Journal , First View , pp. 1 - 29
Copyright
© The Author(s), 2025. Published by Cambridge University Press on behalf of The Faculty of Law, University of Cambridge

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

Footnotes

This article constitutes part of a strand of research in the domain of European banking law which was conducted between 2024 and 2025 at the following institutions: the University of Pisa (Department of Law), the Universidad Complutense de Madrid (Department of Administrative Law) and the Université Paris 1 Panthéon-Sorbonne (Institut de Recherche Juridique André Tunc). I would like to express my sincere gratitude to the staff members of these esteemed public institutions for their invaluable assistance in locating legal sources and case law. I am also indebted to Fernando Botija and Anne-Claire Rouaud for their hospitality in Madrid and Paris respectively. I acknowledge the invaluable insights and recommendations provided by Michela Passalacqua and Luca Perfetti concerning my research in Italy on the public powers of the EBA in the context of European case law. The key elements of the research, including the limits of the EBA’s administrative discretion and public interests, were presented at the 14th Annual Conference of the Asociación Española de Derecho y Economía, hosted by the Departamento de Dret de la Universitat Pompeu Fabra de Barcelona on 27–28 June 2024; and for this I would like to thank Gabriel Doménech Pascual for the invitation, as well as Stefano Lombardo and Casimiro Nigro for their constructive comments. An early draft of the manuscript received substantial feedback from two anonymous referees, while the editorial assistance of Professor Helen Scott throughout the publication process was exceptional. Finally, I would like to express my gratitude to Eden Howard for her meticulous editorial revision of the text and footnotes and to Professor Adrian Bedford for his invaluable linguistic revision of the manuscript.

References

1 See e.g. R.H. Hasse, W. Weidenfeld and R. Biskup, The European Central Bank: Perspectives for a Further Development of the European Monetary System (Gütersloh 1990); A. Alesina and V. Grilli, “The European Central Bank : Reshaping Monetary Politics in Europe” (1991) National Bureau of Economic Research Working Paper No. 3860; C. Hadjiemmanuil, The European Central Bank and Banking Supervision (London 1996); R. Smits, The European Central Bank: Institutional Aspects (The Hague 1997); O. Issing, V. Gaspar, I. Angeloni and O. Tristani, Monetary Policy in the Euro Area: Strategy and Decision Making at the European Central Bank (Cambridge 2001); C. Zilioli and M. Selmayr, The Law of the European Central Bank (Oxford 2001); J. de Haan, S.C.W. Eijffinger and S. Waller, The European Central Bank: Credibility, Transparency, and Centralization (Cambridge, MA and London 2005); M. Rostagno, C. Altavilla, G. Carboni, W. Lemke, R. Motto, A. Saint Guilhem and J. Yiangou, Monetary Policy in Times of Crisis: A Tale of Two Decades of the European Central Bank (Oxford 2021); H. James, Making the European Monetary Union: The Role of the Committee of Central Bank Governors and the Origins of the European Central Bank (Cambridge, MA and London 2012); C.V. Gortsos, European Central Banking Law: The Role of the European Central Bank and National Central Banks under European Law (Cham 2020).

2 See e.g. E. Fahey, “Does the Emperor Have Financial Crisis Clothes? Reflections on the Legal Basis of the European Banking Authority” (2011) 74 M.L.R. 581; M. Lamandini, “Towards a New Architecture for European Banking Supervision” (2009) 6 European Company Law 6; M. Lamandini and D. Ramos Muñoz, “Supervisory Review and Evaluation Process (SREP) in the Context of the Exercise of Supervisory Powers and Extraordinary Measures” in B. Joosen, M. Lamandini and T. Tröger (eds.), Capital and Liquidity Requirements for European Banks (Oxford 2022), ch. 18, 526–70; R.M. Lastra, International Financial and Monetary Law (Oxford 2015), chs. 10–11; R.M. Lastra, “Banking Union and Single Market: Conflict or Companionship?” (2013) 36 Fordham International Law Journal 1190; E. Ferran, “The Existential Search of the European Banking Authority” (2016) 17 European Business Organization Law Review 285; J.-P. Salter, “The Multiple Accountabilities of the European Banking Authority” (2019) 22 Journal of Economic Policy Reform 257; D. Fromage, “Guaranteeing the ECB’s Democratic Accountability in the Post-Banking Union Era: An Ever More Difficult Task?” (2019) 26 Maastricht Journal of European and Comparative Law 48; M. Domina, “The Broadening ‘Soft Law’ Powers of the European Banking Authority” (2022) 19 European Company Law 22.

3 Judgment of 13 June 1958, Meroni & Co., Industrie Metallurgiche, SpA v High Authority of the European Coal and Steel Community, C-9/56, EU:C:1958:7. Recently, see M. Simoncini, “The Delegation of Powers to EU Agencies After the Financial Crisis” (2021) 6 European Papers 1485.

4 For a thorough analysis, see M. Chamon, “EU Agencies between Meroni and Romano or the Devil and the Deep Blue Sea” (2011) 48 Common Market Law Review 1055. See also J. Gal, “Legitimationsdefizite und Kompetenzen der EIOPA im Lichte der Meroni-Rechtsprechung” [Legitimacy Deficits and Competences of EIOPA in Light of the Meroni Jurisprudence] (2013) 102 Zeitschrift für die gesamte Versicherungswissenschaft 325; P. Lintner, “De/centralized Decision Making under the European Resolution Framework: Does Meroni Hamper the Creation of a European Resolution Authority?” (2017) 18 European Business Organization Law Review 591.

5 Judgment of 14 May 1981, Giuseppe Romano v Institut national d’assurance maladie-invalidité, C-98/80, EU:C:1981:104, at [20].

6 Judgment of 22 January 2014, UK v Parliament and Council (ESMA-Short Selling), C-270/12, EU:C:2014:18, at [13], [41], [42], [54].

7 Judgment (Grand Chamber) of 15 July 2021, Fédération bancaire française (FBF) v Autorité de contrôle prudentiel et de résolution (ACPR), C-911/19, at [69], [78], [83], [84], [124], [130].

8 On this argument, see D. Vese, Public Interests in Banking Crises: For a New Legal Analysis of the European Banking System (Milan 2024).

9 On this topic, see D. Alford, “The Lamfalussy Process and EU Bank Regulation: Another Step on the Road to Pan-European Regulation?” (2006) 25 Annual Review of Banking and Financial Law 389.

10 For a survey of EBA instruments, see A. Gardella, “L’EBA e i rapporti con la BCE e con le altre autorità di supervisione e di regolamentazione” [The EBA and Relations with the ECB and Other Supervisory and Regulatory Authorities] in M.P. Chiti and V. Santoro (eds.), L’Unione bancaria europea [The European Banking Union] (Pisa 2016), ch. 5, 115 ff., but specifically 124–30.

11 Regulation (EU) No 575/2013 (OJ 2013 L 176 p.1).

12 Directive (EU) No 2013/36/EU (OJ 2013 L 176 p.338).

13 Directive (EU) No 2014/59/EU (OJ L 173, 12.6.2014, pp.190–348).

14 Regulation (EU) No 1093/2010 (OJ 2010 L 331 p.12).

15 Regulation (EU) No 2175/2019 (OJ 2019 L 334 p.1).

16 Regulation (EU) No 1093/2010 (OJ 2010 L 331 p.12), art. 1(3).

17 Ibid.

18 See e.g. P. Dermine, “The Instruments of Eurozone Fiscal Surveillance through the Lens of the Soft Law/Hard Law Dichotomy – Looking for a New Approach” (2022) 23 Journal of Banking Regulation 7; I. Hachez, “Balises conceptuelles autour des notions de « source du droit », « force normative » et « soft law »” [Conceptual Markers around the Notions of “Source of Law”, “Normative Force” and “Soft Law”] (2010) 65 Revue interdisciplinaire d’études juridiques 1, 16–18; E. Schmidt-Aßman, Verwaltungsrechtliche Dogmatik [Dogmatics of Administrative Law] (Tübingen 2013), 57 ff.; N. Foster, Foster on EU Law, 5th ed. (Oxford 2015), 122 ff.

19 Regulation (EU) No 1093/2010 (OJ 2010 L 331 p.12), art. 10.

20 For an in-depth study of the characteristics of European executive power, see the studies by S. Cassese, “La Costituzione europea” [The European Constitution] (1991) 3 Quaderni costituzionali 487; D. Curtin, Executive Power of the European Union: Law, Practices, and the Living Constitution (Oxford 2009); P. Dann, “The Political Institutions” in A. von Bogdandy and J. Bast (eds.), Principles of European Constitutional Law (Oxford 2006), ch. 7; K. Lenaerts, “Some Reflections on the Separation of Powers in the European Community” (1991) 28 Common Market Law Review 11.

21 Cf. Regulation (EU) No 1093/2010 (OJ 2010 L 331 p.12), art. 15.

22 Cf. ibid., arts. 10(1), 15(1).

23 On the different types of soft law, see L. Senden, Soft Law in European Community Law (Oxford and Portland, OR 2004).

24 For an analysis of soft law powers with regard to ESAs, see e.g. E. Chiti, “European Agencies’ Rule-Making: Powers, Procedures and Assessment” (2013) 19 European Law Journal 93; M. van Rijsbergen, Legitimacy and Effectiveness of ESMA’s Soft Law (Cheltenham 2021). Recently, for a comparative analysis supported by empirical research, see also M. Eliantonio, E. Korkea-Aho and O. Stefan (eds.), EU Soft Law in the Member States: Theoretical Findings and Empirical Evidence (London 2021), ch. 3.

25 For an analysis of soft law powers by European administrative agencies, see P. Rocca and M. Eliantonio, “European Union Soft Law by Agencies: An Analysis of the Legitimacy of their Procedural Frameworks” in M. Conticelli, M. de Bellis and G. della Cananea (eds.), EU Executive Governance: Agencies and Procedures (Turin 2019), ch. 8, 177 ff.

26 For a discussion of the intensity of soft law powers, see F. Coman-Kund and C. Andone, “European Commission’s Soft Law Instruments: In-Between Legally Binding and Non-Binding Norms” in P. Popelier, H. Xanthaki, W. Robinson, J.T. Silveira and F. Uhlmann (eds.), Lawmaking in Multi-Level Settings: Legislative Challenges in Federal Systems and the European Union (Baden-Baden 2019), ch. 8, 188.

27 For an extensive discussion on the recommendations of the ESAs, see R. Vabres, “La portée des recommandations de l’Autorité européenne des marchés financiers” [The Scope of the European Securities and Markets Authority’s Recommendations] in F. Ferrand (ed.), Liber Amicorum – Blanche Sousi – L’Europe bancaire, financière et monétaire [Liber amicorum – Blanche Sousi – Banking, Finance and Monetary Europe] (Schaerbeek 2016), 95–104.

28 For an interesting point of view, see A. Magliari, “La proposta di riforma delle Autorità europee di vigilanza finanziaria: Verso un ulteriore accentramento delle funzioni di vigilanza a livello sovranazionale: prospettive e problemi” [The Proposed Reform of the European Financial Supervisory Authorities: Towards a Further Centralisation of Supervisory Functions at Supranational Level: Perspectives and Problems] (2018) 2 Rivista Italiana di Diritto Pubblico Comunitatrio 391–443.

29 Cf. Regulation (EU) No 1093/2010 (OJ 2010 L 331 p.12), art. 16a.

30 Cf. ibid., art. 16b.

31 Directive (EU) No 2006/48/EC (OJ 2006 L 177 p.1).

32 Regulation (EU) No 2016/679 (OJ 2016 L 119 p.1).

33 See Case C-301/02 P, Salvatore Tralli v European Central Bank [2005] E.C.R. I-4071.

34 Judgment of 14 May 1981, Romano, 98/80, EU:C:1981:104.

35 See Chamon, “EU Agencies between Meroni and Romano”, 1057–60.

36 Judgment of 22 January 2014, UK v Parliament and Council, C-270/12, EU:C:2014:18, at [53].

37 Ibid., at [54].

38 Regulation (EU) No 236/2012 (OJ 2012 L 86 p.1).

39 See P. Craig, EU Administrative Law, 3rd ed. (Oxford 2018), 170–72.

40 See G. della Cananea, L’Unione europea. Un ordinamento composito [The European Union. A Complex Order] (Bari 2003); E. Chiti and C. Franchini, L’integrazione amministrativa europea [The European Administrative Integration] (Bologna 2003); E. Chiti and G. Vesperini, The Administrative Architecture of Financial Integration: Institutional Design, Legal Issues, Perspectives (Bologna 2016).

41 See M. Chamon, “The Empowerment of Agencies under the Meroni Doctrine and Article 114 TFEU: Comment on United Kingdom v Parliament and Council (Short-selling) and the Proposed Single Resolution Mechanism” (2014) 39 European Law Review 380; C.F. Bergström, “Shaping the New System for Delegation of Powers to EU Agencies: United Kingdom v. European Parliament and Council (Short selling)” (2015) 52 Common Market Law Review 219.

42 Craig, EU Administrative Law, 65–66.

43 G.R.R. Martin, A Clash of Kings: Book Two of a Song of Ice and Fire (New York 2011), 180, 181, 392, 397, 407, where “What is dead may never die” is the motto of House Greyjoy.

44 See the Opinion of Advocate General Bobek delivered on 15 April 2021 in Fédération bancaire française (FBF) v Autorité de contrôle prudentiel et de résolution (ACPR), C-911/19, EU:C:2021:294, at 1–35, but especially at 1, where the passage from Martin’s book, “What is dead may never die”, is quoted.

45 In developing this topic, a reliable point of reference for the reconstruction and articulation of public interests in European legal doctrine and case law is the contribution of J. Mendes, “Discretion, Care and Public Interests in the EU Administration: Probing the Limits of Law” (2016) 53 Common Market Law Review 419, as well as, with specific reference to European banking law, J. Mendes, “Law and Discretion in Monetary Policy and in the Banking Union: Complexity between High Politics and Administration” (2023) 60 Common Market Law Review 1579.

46 On this argument, once again allow me to refer to Vese, Public Interests in Banking Crises.

47 Judgment of 15 July 2021, Fédération bancaire française (FBF) v Autorité de contrôle prudentiel et de résolution (ACPR), C-911/19, EU:C:2021:599. See N. de Arriba-Sellier, “Upholding Romano, Eroding Meroni: The Ruling of the Court of Justice in FBF” (20 July 2021), available at https://eulawlive.com/op-ed-upholding-romano-eroding-meroni-the-ruling-of-the-court-of-justice-in-fbf-by-nathan-de-arriba-sellier/ (last accessed 11 December 2022).

48 Cf. EBA, “Guidelines on Product Oversight and Governance Arrangements for Retail Banking Products” (EBA/GL/2015/18, 22 March 2016), available at https://www.bde.es/f/webbde/INF/MenuHorizontal/Normativa/guias/eba-gl-2015-18_en-pub.pdf (last accessed 8 April 2025).

49 On which, see M. Eliantonio, “Of Life, Death, Resurrection, and Legal Zombies: Advocate General Bobek’s Opinion in Fédération bancaire française”, 21 April 2021, available at https://eulawlive.com/op-ed-of-life-death-resurrection-and-legal-zombies-advocate-general-bobeks-opinion-in-federation-bancaire-francaise-by-mariolina-eliantonio/ (last accessed 8 April 2025).

50 See M. Chamon and N. de Arriba-Sellier, “FBF: On the Justiciability of Soft Law and Broadening the Discretion of EU Agencies” (2022) 18 European Constitutional Law Review 286, but on this point, see 298–99.

51 For a comparative analysis on the legitimacy and accountability regimes of financial regulators, see P. Iglesias-Rodríguez, The Accountability of Financial Regulators: A European and International Perspective (Alphen aan den Rijn 2014).

52 On the nature of the role of ESAs, see B. Rittberger and A. Wonka, “Introduction: Agency Governance in the European Union” (2011) 18 Journal of European Public Policy 780.

53 On the necessity of technical administrations for EU governance, see G. Majone, Regulating Europe (London 1996).

54 On legitimacy as a legal precondition characterised by a political and social nature, see J. Black, “Constructing and Contesting Legitimacy and Accountability in Polycentric Regulatory Regimes” (2008) 2 Regulation & Governance 137.

55 In the context of administrative regulatory powers, see e.g. P. Craig, UK, EU and Global Administrative Law: Foundations and Challenges (Oxford 2015), 679 ff.; E. Chiti, “Is EU Administrative Law Failing in Some of its Crucial Tasks?” (2016) 22 European Law Journal 576, 590 ff.

56 For an analysis of the legal and political limits of European administrative agencies and possible solutions, see Craig, EU Administrative Law, 168–74.

57 D. Curtin, “Delegation to EU Non-Majoritarian Agencies and Emerging Practices of Public Accountability” in D. Geradin, R. Muñoz and N. Petit (eds.), Regulation through Agencies in the EU: A New Paradigm of European Governance (Cheltenham and Northampton, MA 2005), ch. 5, 88 ff.

58 Cf. Regulation (EU) No 1093/2010 (OJ 2010 L 331 p.12), art. 8(1)(a).

59 Ibid., art. 8(1)(j).

60 Ibid., art. 8(1)(b).

61 Ibid., art. 8(1)(h).

62 Ibid., art. 1(5).

63 On the phenomenon of regulator capture, see the classical study of G.J. Stigler, “The Theory of Economic Regulation” (1971) 2 The Bell Journal of Economics and Management Science 3, as well as G.J. Stigler, “Public Regulation of the Securities Markets” (1964) 37 Journal of Business 117.