The European Banking Union and Constitution

Among the institutional innovations promoted by the European Union (EU) in order to respond to the Euro and sovereign debt crisis, the Banking Union (BU) is certainly one of the most relevant. It is constituted by three pillars: a Single Supervisory Mechanism (SSM), a Single Resolution Mechanism (SRM) and a European Deposit Insurance Scheme (EDIS). Based on the analysis of the only first two pillars so far implemented, the chapter argues that the BU constitutes a case of tempered supranationalism. The relevant delegation of powers to supranational institutions (the European Central Bank or ECB in particular) has been tempered by crucial institutional provisions that ensure an important decision-making or controlling role for the member states’ governments. Moreover, the progressive mutualisation of national funds in the SRM has been enacted through an inter-governmental agreement which gives the participating member states’ governments a high leverage regarding the implementation of the Single Resolution Fund (SRF) and its future modifications. This chapter reconstructs the process that led to the adoption of the first two pillars of the BU and analyses their institutional structure in order to show their logic and functioning. The BU continues to be the arena for a confrontation between supranational needs and intergovernmental interests.