European Banking Union: Context, Structure, Challenges and Opportunities

27 Pages Posted: 18 May 2021

See all articles by Bozena Gulija

Bozena Gulija

European Court of Auditors

Dalvinder Singh

University of Warwick - School of Law

Date Written: May 14, 2021

Abstract

The European Banking Union (EBU) has had a complex strategic, political, economic and legal formation, and throughout the current turmoil there has been a special emphasis on preserving its stability and further development. The EBU formally consists of three interconnected pillars applicable to the euro area: (1) the Single Supervisory Mechanism (SSM) that encompasses European Central Bank’s (ECB) direct and indirect prudential supervision; (2) the Single Resolution Mechanism (SRM) that provides for a harmonized resolution framework; and (3) an envisaged safety net in the form of the European Deposit Insurance Scheme (EDIS). Additionally, the EBU is based on the common EU-wide Single Rulebook.

A strong incentive for the EBU’s creation originated both from the repercussions of the global financial crisis and the European sovereign debt crisis. The EBU has experienced constant challenges from its very beginning, including the opposition to any indication of a transfer union, and criticism related to its design. Although progress is recommended on all elements, the most compelling is timely completion of the EDIS. From its inception, the EBU’s main goal has been to break the “vicious circle” between sovereigns and their banks – and that is in the focus of this article. Furthermore, this article explores the structure, achievements and inadequacies of the EBU pillars, and analyses potential threats and opportunities related to this segment of European integration.

Keywords: European Banking Union, Supervision, SSM, ECB, Resolution, SRM, SRB, Deposit Insurance, DGS, EDIS

JEL Classification: K23, G21, G28

Suggested Citation

Gulija, Bozena and Singh, Dalvinder, European Banking Union: Context, Structure, Challenges and Opportunities (May 14, 2021). Available at SSRN: https://ssrn.com/abstract=3846338 or http://dx.doi.org/10.2139/ssrn.3846338

Bozena Gulija

European Court of Auditors ( email )

L-1615 Luxembourg
Netherlands

Dalvinder Singh (Contact Author)

University of Warwick - School of Law ( email )

Gibbet Hill Road
Coventry CV4 7AL, CV4 7AL
United Kingdom
024 76150675 (Phone)
024 76524104 (Fax)

HOME PAGE: http://www2.warwick.ac.uk/fac/soc/law/staff/academic/dalvinder

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