We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.
Published online by Cambridge University Press: 09 August 2023
Origins and overview
The banking union involves a number of initiatives to create a safer banking system, including a single rulebook for all EU banks and a single supervisory mechanism, aimed at enhancing the safety and soundness of the banking system. It also includes a single resolution mechanism, which is aimed at the orderly restructuring of banks that are failing or are likely to fail. Together with the single rulebook, the SSM is intended to minimize the number of bank failures, while the SRM is intended to minimize the harm to the real economy from banks that are failing or are about to fail. Between them, the first two pillars are expected to put an end to “too big to fail” – a distortion that is widely believed to have led to excessive risk taking by large banks prior to the global financial crisis.
The idea of creating a banking union in Europe was first placed on the policy agenda by IMF managing director Christine Lagarde on 17 April 2012. Lagarde explained that the monetary union needed to be supported by stronger financial integration, in the form of unified supervision, a single bank resolution authority and a single deposit insurance fund. Europe quickly welcomed Lagarde’s proposals, with Mario Draghi first echoing them in a speech to the European Parliament on 25 April 2012, followed a month later by French president François Hollande, the Italian prime minister Mario Monti and the European Commission president José Manuel Barroso. By the end of June 2012 there was political agreement at the European Council for the creation of the SSM under the ECB’s authority. Political agreement for the creation of the SRM was achieved in December 2012. By 4 November 2014 SSM was not only established but also fully functional as it assumed authority for banking supervision in respect of all banks in the euro area. SRM was established in 2014 and assumed its authority in 2016.
The third and final pillar for a fully fledged banking union, which remains incomplete, is the creation of a European deposit insurance scheme (EDIS).
To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.
