European Banking Union: Imperfect, But It Can Work

29 Pages Posted: 19 Apr 2014 Last revised: 16 Aug 2014

See all articles by Eilis Ferran

Eilis Ferran

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)

Date Written: April 17, 2014


European Banking Union (EBU) is an odd construction born of compromises and shaped to fit into legal territory bounded by EU Treaty constraints that cannot be adjusted in the current political environment. Can EBU work in spite of the limitations of its design or is there dangerous papering over the cracks? This paper addresses this question by examining the capacity of the EBU to help stabilize the euro area and to contribute to the reversal of current trends towards fragmentation and renationalization of financial markets. The paper looks closely at the design of both the Single Supervisory Mechanism and the Single Resolution Mechanism, on which the EU legislative Institutions reached agreement in April 2014. From this analysis the paper builds the case for the claim that the legal framework for the two mechanisms is sufficiently robust for the new arrangements to have the authority and credibility to rebuild confidence and, in that way, to contribute to the reversal of the trend towards EU financial market disintegration.

Keywords: euro, crisis, European Union, supervision, resolution

JEL Classification: G18, G20, G28, K23, P48

Suggested Citation

Ferran, Eilis, European Banking Union: Imperfect, But It Can Work (April 17, 2014). University of Cambridge Faculty of Law Research Paper No. 30/2014, Available at SSRN: or

Eilis Ferran (Contact Author)

University of Cambridge - Faculty of Law ( email )

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European Corporate Governance Institute (ECGI)

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