In response to the sovereign crisis, the EU created the Banking Union in 2012 to safeguard financial stability, deliver a safer banking sector and protect the taxpayer from the cost of bank failures. The Banking Union, currently covering the 19 Eurozone countries, is also open to other EU Member States and is based on three pillars.
The first pillar is the Single Supervisory mechanism (SSM), a new system of banking supervision comprising the ECB and the national authorities, directly supervising the 115 most significant banks of the euro area (holding almost 82% of assets). The second pillar is the Single Resolution Mechanism (SRM) in charge of the resolution of failing banks with minimal costs for taxpayers and to the real economy.
The funds used for resolution are provided by the Single Resolution Fund (SRF), financed by contributions from banks and guaranteed as a last resort by a Common Backstop provided by the ESM, following an agreement reached by the Member States. In case it is used the common backstop would be repaid by the banking sector. A single rulebook applies to these two first pillars.
The third pillar is the European deposit insurance scheme (EDIS) for bank deposits in the euro area proposed by the Commission in November 2015. Building on the system of national deposit guarantee schemes (DGS), this system already ensures that all deposits up to €100 000 are protected by DGSs all over the EU. Ultimately, these national DGSs are to be fully financed by EDIS
Contributions to the policy debate
Extracted from the main Eurofi publications (Regulatory Updates, Views Magazines and Conference Summaries)
Eurofi policy notes
Public and private
Public authority views
M. Merlin - DG for Financial Stability, Financial Services and Capital Markets Union, European Commission - Evolution rather than revolution in crisis management and deposit insurance - April 2021 new
K-P. Schackmann - Fallis - Deutscher Sparkassen- und Giroverband (DSGV) - Improving the crisis management and deposit insurance framework while preserving the diversity of the EU banking system - April 2021 new