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Banking Union

 

Banking Union

Context

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)

Public and private
sector views

Public authority views

Banking Union

M. Merlin - European Commission - Fostering market integration and completion of the Banking Union - September 2020 new

E. Wimmer - Federal Ministry of Finance, Germany - Never waste a good crisis - the Banking Union for a better recovery and lasting prosperity - September 2020 new

M. Ferber - European Parliament - A Banking Union for a stronger Europe - April 2020

R. Holzmann - Oesterreichische Nationalbank - What are the costs and risks of a delayed compared to a half-baked completion of the Banking Union? - April 2020

C. da Silva Costa - Banco de Portugal - Safeguarding financial stability at local level within the Banking Union - April 2020

V. Vasiliauskas - Bank of Lithuania - Completion of the Banking Union calls for a comprehensive approach - April 2020

I. Tinagli - European Parliament - The cost of not achieving the Banking Union - April 2020

Resolution framework

E. Fernandez-Bollo - European Central Bank (ECB) - The coronavirus pandemic and banking integration - September 2020 new

L. Garicano - European Parliament - Towards an innovative European solution to bad loans - September 2020 new

E. König - Single Resolution Board (SRB) - Paths towards a clear and predictable liquidation regime - September 2020 new

M. Drvar - Croatian National Bank - Material matters: parent institutions and home supervisors attention needed - April 2020

E. Fernandez-Bollo - European Central Bank (ECB) - Banking Union beyond home and host - April 2020

E. König - Single Resolution Board - A centralized administrative liquidation tool for banks - April 2020

M. Merlin - European Commission - Towards a more effective crisis management and completion of the Banking Union - April 2020

EDIS

P. Hernández de Cos - Banco de España - Common policies against common shocks - April 2020

J. Fernández - European Parliament - EDIS: completing the Banking Union - April 2020