Edited by François-Charles Laprévote, Joanna Gray and Francesco De Cecco
Chapter 4: State aid to banking: application of the market economy investor principle
While most of the public support of financial institutions granted during the crisis period was deemed State aid, there were still a few instances in which public support escaped this qualification. This chapter examines the conditions under which public funding of banks does not constitute State aid, with particular emphasis on the application of the market economy investor principle (MEIP) to banking. It describes the main aspects of the MEIP, refers to the role of the European Central Bank in defining the rates of remuneration that would be acceptable to a private investor, and reviews the main contentious issues arising from application of the MEIP. It also refers to other public measures which do not constitute State aid other than by conforming with the behaviour of a hypothetical private investor.
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