Banking union and the long wait for cross-border integration

The banking union project has achieved European-level policy integration of microprudential supervision but not of crisis intervention. This largely explains the disappointing progress in the cross-border integration of the banking sector, which we document using data on banks' assets and also specifically on their sovereign exposures. In a capital markets union, there is no equivalent of the banking crisis intervention framework and related public financial safety net, and therefore supervisory integration can have more direct catalytical impact in that context than in banking.