Banking Union- Present Stage and Its Perspectives

• Author: Petre Prisecaru
• Position: Senior researcher, PhD, Institute for World Economy, Romanian Academy, Romania
• Pages: 146-155

European Integration - Realities and Perspectives 2014

146

Banking Union- Present Stage and its Perspectives

Petre Prisecaru

1

Abstract: Banking Union is very important for financial stability of EU, for preventing any future crisis, for

improving corporate governance in the banking sector, for co mpleting the single market for financial services

and for the strengthening of monetary union, for opening the way to fiscal union and to political union. There

is not enough theoretical research in the field of banking union, but there are many recent contributions on

behalf of foreign and Romanian experts and analysts, which refer mainly to the three components/pillars of

EU banking union: a Single Supervision Mechanism (SSM), a Single Resolution Mechanism (SRM) and an

harmonized system of deposit guarantee schemes. Some micro studies and surveys carried out by prestigious

institutions, like Deutsche Bank, Broo kings Institution, CEPS have been run over and analyzed together with

the positions and opinions of different European officials, and also with the content of EU secondary

legislation. An empirical research was made with the aim to identify all essential aspects relatin g to EU

banking union, which may concern the academics, researchers and business community. The paper is based

on a previous research study coordinated by author and contains his own conclusions focused on the main

arguments in favour of banking union.

Keywords: bank; supervision; resolution; legislation; institutions

JEL Classification: G01, G18, G21

1. Introduction

EU Banking Union is a new and ambitious project based on a better European supervision and

regulation framework established after the crisis and involves a legislative and institutional building

up under the direct guidance of European Council. While Single Supervisory Mechanism is more

advanced in materializing due to a new regulation adopted by EU Council and due to activity of

Supervisory Board of ECB, European Commission and European Banking Authority, it will take some

time to create and implement a Single Resolution Mechanism and it is not clear what will happen with

the funding of Deposit Guarantee Schemes at European level. Romania and other non–euro Member

States will participate to banking union in order to remove the structural vulnerabilities and

fragmentation of banking sector, to improve its performance and contribution to economic growth.

2. Important Steps Recorded in the Formation of Banking Union

When in 1961 Bela Balassa defined the five stages of economic integration- free trade area, custom

union, common market, economic and monetary union, total economic union- European integration

process was in the first years after Rome Treaty, but in the second stage, that of creating a custom

union for the six member states of European Community which was finally achieved in the mid 1968

together with a common market for agricultural products. The liberal vision of Rome Treaty, see the

four fundamental freedoms, was in stark contrast with the national interventionism inspired by Keynes

1 Senior researcher, PhD, Institute for World Econ omy, Ro manian Academy, Romania. Address: 125 Calea Victoriei,

Bucharest 010071, Romania, Tel.: +4021 212 8640, Corresponding author: petreprisecaru@yahoo.com.