Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

26 June 2012

European Commission: A banking union for Europe


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, three 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:

  • EU-wide bank rules – including common but flexible requirements on the amount of capital banks are required to hold;
  • a single EU banking supervisor with direct oversight of banks operating in multiple countries and of very large banks – to enforce rules and oversee risk controls;
  • common rules for preventing bank failures and for intervening when a bank gets in financial trouble – before taxpayer-funded bailouts are needed;
  • a single deposit guarantee scheme to protect depositors wherever they hold savings and investments in the EU – reinforcing confidence in the banking system.
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.
 
Further steps
 
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.
 


© European Commission


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment