Significant progress has been made on the Banking Union since 2012. The Single Supervisory Mechanism and the Single Resolution Mechanism have been established. At the same time, the financial stability of the euro area has improved. The capital positions of euro area banks have strengthened, as can be seen from Figure 3.
Following the crisis, global banks retreated from cross-border lending, amplifying the impact of the financial crisis on those economies that did not have alternative sources of funding, and prompting partial substitution by official credit.