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Part I General Aspects, 1 The Economic Consequences of Europe’s Banking Union

Nicolas Véron

From: European Banking Union (2nd Edition)

Edited By: Danny Busch, Guido Ferrarini

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 18 April 2024

Banks and cross-border issues — Deposit insurance schemes — Eurozone — Liquidity — Monetary sovereignty — Monetary union — Basel committee on Banking Supervision — European Central Bank — Financial Stability Board (FSB)

This chapter considers how Europe’s banking union is a structural shift for the euro area’s banking sector. It has already had significant economic impact, as it contributed to the resolution of the euro area crisis from its inception in mid-2012 and has also led to an erosion of the moral hazard that remains pervasive in the system. More consequences are likely to unfold in years ahead, as the European Central Bank keeps tightening its banking supervisory framework, more cases of bank failures may emerge, and new EU legislation to ‘complete the banking union’ may be considered by the co-legislators. At this stage, the banking union has not yet achieved its stated economic objective of breaking the vicious circle between banks and sovereigns in the euro area. It has, however, laid the groundwork for possible future policy steps in that direction.

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