The European Banking Union. How Effective?

Threatening to disrupt the Euro construction, the severity of the sovereign crisis has prompted the European Commission to propose the scheme for a Banking Union based on three pillars: Single Supervisory Mechanism, single resolution authority and common deposit insurance. Much of the current debate has focused on the perils associated with the decision by the European Council to implement the first pillar, leaving the green light for the second pillar to a later stage. Perhaps the third pillar will be altogether suppressed from the roadmap. Differently, this policy brief assesses the merit of the scheme in its entirety, including the (re-)regulatory framework from which the Banking Union will derive its operational features. It is then argued that the current approach to regulation will impede to reach a significant improvement with respect to the recent experience.

Author: Mario Tonveronachi