Some banks are still lumbered with legacy exposures and can only play an inadequate part in the necessary structural change in the real economy. In this situation, the banking union can play a significant role in better identifying risks in the future by way of the Single Supervisory Mechanism.
At the same time, the Single Resolution Mechanism represents a considerable step towards improving the manner in which risk is handled in a monetary union made up of sovereign states. 3  A Sapir and G Wolff (2013), The Neglected Side of Banking Union: Reshaping Europe’s Financial System, Policy contribution presented at the informal ECOFIN in Vilnius.