PRIMER: the EU Banking Union

Author: Olly Jackson | Published: 22 Feb 2018

What is the European Banking Union?

The European Banking Union (EBU) was launched in 2012 as a response to the financial crisis. Its premise is a transfer of banking sector policy and oversight from member states to EU institutions.

Discussions to complete it have not stopped since it was created, but these have intensified in recent weeks. EU finance ministers met together at the end of January to stress that progress needs to be made on a proposal said to make the eurozone more resilient to economic shocks. The EBU would establish EU-wide authorities to supervise banks and handle crises. But for it to go ahead, further risk management measures like reducing banks’ holdings of non-performing loans (NPLs) are required to satisfy countries like Germany and Finland to move on to the next step.

Political instability presents a more troubling risk to the plan. Angela Merkel’s Christian Social Union...