Banking Union: State of Play and Proposals for the Way Forward

Abstract

This paper examines the current state of play of the Banking Union project aiming at unveiling the weaknesses and gaps of this still incomplete framework. In this context, the implementation so far of the Banking Union legislation sheds light on the vulnerabilities concerning supervisory change, transparency, trust and a proper allocation of bank failure costs since all these criteria are deemed as essential contributing factors to promoting financial stability at European level. Taking into consideration the latest steps towards completing the Banking Union framework until June 2022, this paper aims at depicting the proposed leeway potentially capable to align resilience and flexibility with the view of mitigating any persisting shock-amplifying factor against financial stability.

Keywords: Banking Union, Single Supervisory Mechanism, Single Resolution Mechanism, European Deposit Insurance Scheme

JEL Classification: G21, G28, O52, E42, F33, F42