The establishment of the European Banking Union as a decisive step towards the completion of the Economic and Monetary Union The latest developments
Journal of Finance and Investment Analysis, 2018, vol. 7, issue 1, 2
The financial and economic crisis occurred since 2008, has threatenedÂ economic stability in the whole euro zone. Besides it showed that the EU bankingÂ system was highly vulnerable to turbulences. This is why the EU competentÂ institutions have elaborated since 2012 a strategy for the implementation ofÂ reforms in the financial, fiscal and economic sectors with the ultimate aim ofÂ strengthening the institutional architecture of Economic and Monetary UnionÂ (EMU). One of the building blocks on which is based the above project is theÂ establishment of the European Banking Union (EBU). The EBU is based on aÂ single regulatory framework, known as the single rulebook. This is a set of rulesÂ contained in EU regulations and directives governing the single market ofÂ financial services. The EBU covers three crucial for the stability of the financialÂ system issues namely: (a) the supervision of banks which is necessary to preventÂ banking crises, (b) the management (settlement) of banking crises and (c) theÂ deposit guarantees. The primary element of the EBU is the creation of aÂ supranational (European) banks prudential supervision framework including onÂ the one hand uniform rules on financial services applicable to all Member StatesÂ and on the other a Single Supervisory Mechanism (SSM). This supranationalÂ system is complemented by the creation of an integrated European framework ofÂ banking sector crises settlement. Main pillar of this framework is a centralÂ supranational financial institutions resolution authority, the Single ResolutionÂ Mechanism (SRM) which is the necessary complement of SSM. The EBU lastÂ component is the establishment of an appropriate regulatory framework to provide effective deposit protection across the EU. The purpose of this paper is to analyzeÂ the general principles and specific rules governing the functioning of EBU, theÂ emphasis given to the most recent developments related to this matter.JEL classification numbers: H3, H7, F6Keywords: Banking Union, Single Mechanism, Supervision, Resolution.
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