Common supervision of the EU’s banks would better protect depositors, restore confidence and help cushion financial sector from shocks –important steps for pulling Europe out of the crisis.
The economic and financial crisis has demonstrated that the EU’s banking system is vulnerable to shocks. A problem at one bank can spread quickly to others, affecting depositors, investment and the overall economy.
In response, the EU and its member countries have been strengthening financial sector supervision. As part of the reforms, 3 European supervisory bodies were set up last year to help coordinate the work of national regulators and ensure EU-level rules are applied consistently.
But more can be done to ensure financial stability. Commission president José Manuel Barroso is calling for a banking union to restore confidence in banks and the euro – and as part of a longer term vision for economic and fiscal integration. The main elements would be:
The Commission has already made proposals on some of the main elements needed for a banking union. These include an EU law to help EU countries and national regulators respond quickly and effectively to a banking crisis.
The Commission is planning further proposals – on a common bank bailout fund, bank failures, and closer coordination of tax and spending policies.
EU leaders will discuss proposals for a banking union and a fiscal union at their meeting on 28-29 June.