The Sound of Economics
Ten years of Europe’s banking union
Jan 31, 2024
Nicolas Véron and Harald Waiglein discuss the origins and challenges of Europe's banking union in this episode. They cover the integration of supervision, resolution, and deposit insurance, the importance of international cooperation, and the unfinished business in the framework. They also explore the regulatory treatment of sovereign exposures, maintaining confidence in the banking sector, and adopting a best practice model.
50:53
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Quick takeaways
- Banking union in the European Union (EU) was introduced in 2012, with supervision effectively implemented, but resolution and deposit insurance remain unfinished.
- Sovereign exposures of banks in the Eurozone, heavily holding domestic sovereign debt, have been a major obstacle to completing the banking union.
Deep dives
The Origins of Banking Union in the European Union
Banking union in the European Union (EU) was not a new idea in 2012 but had been discussed for decades. However, political obstacles, such as member states' attachment to their domestic banking sectors, hindered its implementation. The urgency to avoid a collapse of the Eurozone pushed leaders to overcome these obstacles. In 2012, banking union was introduced, comprising three pillars: supervision, resolution, and deposit insurance. While supervision has been effectively implemented, resolution and deposit insurance remain unfinished.
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