So far, financial markets in Europe are not the only entities which are to some extent fragmented along national borders – financial supervision is as well. This absence of a true level playing field has certainly contributed to financial market fragmentation. The application of uniform standards by a single European banking supervisor will foster integration.
But single supervision has to be complemented with a single resolution mechanism. Only if a bank can be resolved in an orderly manner, without endangering financial stability, will authorities have the ability, and the courage, to declare such a bank non-viable. We still have too many banks in Europe lacking a viable business model but not exiting the market.