European Banking Union

Abstract

The sovereign crisis that has characterized the Eurozone since 2010 highlighted the potentially vicious circle between banks and sovereigns, adding an extra dimension to the 2007/08 financial crisis. This is why the EU Heads of State and Government committed to a European banking union in June 2012; a vision that was further developed in the European Commission's blueprint. The aim of the banking union is to ensure that financial institutions of the – for now – 19 Member States will be subject to a single supervision, a single resolution, and a common deposit insurance system. This article explains the background to these initiatives and weighs the progress towards their completion.