European Banking Union as a Self-Fulfilling Prophecy

Abstract

The establishment of the European Economic and Monetary Union (EMU) has represented one of the most important steps in the process of European integration. In an article published in Politics & Policy, I have argued that the EMU has not simply been the product of historical legacies, the rational choices of actors, or social construction of new economic ideas and preferences. It has also been the product of a self-fulfilling prophecy that has facilitated and accelerated the process of institutional transformation. As in the case of the financial crisis of 1929, the source of Merton’s inspiration, and of Roosevelt’s New Deal, the 2008-2009 global financial crisis has opened up a new window of opportunity for the creation of the European Banking Union (EBU), for new forms of financial regulations (the Single Supervisory Mechanism and the Single Resolution Mechanism) and insurance against panic (the European Deposit Insurance Scheme).

Keywords: European Banking Union (EBU), European Economic and Monetary Union (EMU), single market, Eurocrisis, Single Supervisory Mechanism, Single Resolution Mechanism, European Deposit Insurance Scheme, The Snake in the Tunnel

JEL Classification: E00, E02, E42, E52, E58, E6, E63, G18, N02