That implies there would be efficiency gains from consolidation without exacerbating “too-big-to-fail” problems. The fact that we now have a European supervisory and resolution regime presents the ideal conditions for banks to capitalise on new cross-border M&A opportunities.
What our economy needs is European banks operating in a European market: large enough to operate across borders and diversify risks, but small enough to be resolved with the resources of the Single Resolution Fund. This would reap the full benefits of banking union and improve the terms of the trade-off between financial stability and economic efficiency.