EU Fiscal Governance & Monetary Union

The idea of a Banking Union emerged in the aftermath of the global financial crisis. Ten years on, two of its three pillars, the Single Supervisory Mechanism and the Single Resolution Mechanism, have proven to be a success with regard to financial integration and stability. In this Policy Brief, experts from the Deutsche Bundesbank explain why, in times of structural change, it is crucial to complete the Banking Union and advance the Capital Markets Union.

The downfall of Credit Suisse should serve as a lesson that supervisory board competence determines the long-term risk of a bank. In Germany, this idea is also enshrined in law. But this study of German banks shows, there is still a long way to go.

The banking turmoil of 2023 had only a limited impact on banks in the Eurozone and the EU. Nevertheless, important lessons can be learned from this crisis: effective regulation and supervision is a moving target that must adapt to changing circumstances and banks' business models.

Few politicians dare to think aloud about federal models for the European Union. Even as a concept, the federal state is problematic. The perception of an unwieldy organization arises when the goal is a light consensus federation, where the Commission’s power is limited and the member states have more power to run their own affairs. In the European Parliament elections, each state still has its own electoral district. Some member states are divided into several constituencies. There is no need for EU-wide elections at the parliamentary level, nor EU-wide parties.

The 30th anniversary of the European Single Market provides an opportunity to celebrate its successes and review what is yet to be achieved. In the future, the European Single Market will play a decisive role in setting a framework of reliable social standards and common goals. It will ensure Europe’s resilience by helping companies adapt their supply chains to future risks and find new business opportunities. The concrete measures of social policy will be left to the member states.