The firm, cohesive European commitment to Banking Union helped counter financial fragmentation but its incomplete setup seriously jeopardises its key benefits. As the SSM was put in place and the SRM started working, the political will to build the third pillar – a European Deposit Insurance Scheme (EDIS) – and complete the overall architecture waned.
New, bigger political hurdles continue to emerge with policymakers stuck in the risk-reduction vs. risk-sharing debate, losing sight of the final objectives. Today, Banking Union means that supervisory and resolution decisions are mostly European, whilst the ultimate guarantor of financial stability remains national, with limited tools to act.