EU banking union a nice idea but devil's in the detail
Proposed European regulation is becoming ever more diluted, limiting its potential effectiveness
In the beginning, the European Union came up with two words: Banking Union. It sounded simple, solid, united, dependable.
But in the 18 months since it was put on paper, the phrase has come to mask a vastly complicated and not yet very united system that may fall short of resolving the problems afflicting Europe's banks over the past five years.
From a Single Supervisory Mechanism to a Single Resolution Mechanism, incorporating a split-level authority and a Single Resolution Fund, Europe's banking union has become a hydra offering little clarity on when or how quickly a bank's problems can be fixed.
Aside from the plethora of acronyms - SSM, SRM, SRF, BRRD - that litter the snowstorm of documents produced to discuss the concept, it is still not absolutely clear which banks will be overseen by which authority and who has the final (the final, final) say in deciding if a bank has to be wound up.
The decisionmaking part is so … complex that I think it will have to be changed
When it was first sketched out at the height of the euro crisis, banking union was supposed to have three solid planks: a single supervisor for the region's 8,000 banks; a single resolution authority to restructure or close failing banks; and a unified scheme for guaranteeing bank deposits.