Developments of recent days tend to confirm this hypothesis. Conflicts of interest emerge not only with respect to crisis prevention but also crisis resolution. Authorities have an incentive to push the burden of adjustment, in case of a crisis, towards other institutions, either domestic or foreign.
Third, shifting banking supervision from the national to the European level adds a layer of separation between supervisors and the banks they supervise. This will prevent domestic supervisors from handling their banks with kid gloves out of national interest.