As I pointed out earlier, establishing the Single Supervisory Mechanism is only the first pillar of the European banking union. Banking supervision cannot and should not prevent individual banks from failing – either at the national level or at the European level. The possibility of failure is an essential element of a well-functioning market economy.
Nonetheless, one lesson we learned from the financial crisis is that the failure of very large or interconnected banks could lead to a systemic crisis. Thus, as I have already mentioned, solving the “too big to fail” problem is crucial in order to make the financial system more stable and save taxpayers’ money.