Véron, N. (2014) “European Banking Union: Current Outlook and Short-Term Choices”, Statement presented at the conference “Banking Union and the Financing of the Portuguese Economy,” Assembleia da Republica/ Portuguese Parliament, Lisbon, 26 February.
The launch of Europe’s banking union on June 29, 2012, was arguably the European Union’s most consequential policy initiative since the start of its financial crisis in mid-2007. Banking union, defined as the transfer of banking sector policy from the national to the European level, is a highly ambitious project. Its completion will take many more years, but it is already changing the structures of the European financial system and has wide-ranging political implications. Its implementation to date, while protracted and far from straightforward, is broadly in line with the initial commitment.
As decided in June 2012, the first steps are the formation of a Single Supervisory Mechanism (SSM) within the European Central Bank (ECB) and its corollary, a comprehensive assessment of the euro area’s largest banks, generally referred to as its most critical component, the asset quality review (AQR). At this juncture, the prospects for the AQR and the establishment of the SSM to be successfully implemented before the end of 2014 are encouraging, even though the most difficult phase still lies ahead.
Relevant posts:
- Legrain, P. (2014) “Europe’s Bogus Banking Union“, Project Syndicate, 08 April.
- Veron, N. (2014) “Tectonic shifts – banking union is a long-term process that will dramatically reshape Europe’s financial system”, Bruegel, 07 March.
- Valante, D. (2014) “Framing Banking Union in the Euro Area: Some empirical evidence”, CEPS Working Document, N. 389/ February 2014.