The Current State Of The Banking Union And The Main Challenges Of This Project

One of the key responses of the European authorities to the international financial crisis and the sovereign debt crisis was the launch of the Banking Union (BU) project in 2014. The purpose of the BU was to help reduce the fiscal cost of bank bailouts and to weaken the link between the risks of the banking systems and the macroeconomic stability of the Member States. So far, important steps have been taken in the direction of creating the single regulatory framework for banks throughout the European Union (EU), as well as increasing the convergence of banking supervision and resolution mechanisms. Despite the progress made, the BU is far from being complete, and the European banking sector remains largely fragmented and exposed to risks.The article presents the current state of the BU project and its missing elements, while analysing the main challenges related to its completion.