From deadlocks to breakthroughs : how we can complete the banking union and why it matters to all of us

The establishment of the banking union was a crucial step for European integration and for the Economic and Monetary Union. Together with stronger capital and liquidity requirements under the European single rulebook, the introduction of the Single Supervisory Mechanism and the Single Resolution Mechanism, alongside new macroprudential tools, made the banking system more resilient and better prepared for crises. The banking union facilitated a fast, strong and coordinated response to the unfolding coronavirus (COVID-19) crisis that would have been unthinkable in the institutional setting existing in 2008. At the same time, the banking union is still incomplete and progress is needed: there is no European deposit insurance scheme, the backstop to the Single Resolution Fund has to become operational, and we need a common framework for the provision of liquidity to banks in resolution, as well as adjustments to the crisis management framework. Additionally, despite progress until 2015, financial integration within the euro area has not improved in recent years. Synergies between the banking union and other policy initiatives, such as the capital markets union, could further improve financial integration to the benefit of the European project and European citizens.