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“For the stability of the European monetary union, the banking union is essential,” Schnabel said. “We have seen in the euro crisis that a crisis in a member state can get meaningfully worse if banks are too closely tied to the country they sit in, so it is of enormous importance to loosen that close risk composite between banks and states with the banking union.”
Merkel has urged progress on strengthening the euro area and creating a banking union before European Parliament elections in May, though those efforts have been hindered by more pressing issues, such as migration and Brexit. The European Union’s banking-union project, which dates back to 2012, is also an attempt to level the playing field in the bloc’s financial markets.
“Whoever is against the banking union is essentially against the euro,” Schnabel said in the interview.