Meanwhile, a comprehensive banking union has to comprise more than just an effective European banking supervision. The second pillar of the banking union is a European resolution mechanism to deal with future bank failures. This mechanism will be in place from 2016 onwards.
If push comes to shove and a bank is no longer viable, shareholders and creditors will be first in line to bear banks’ losses, and taxpayers’ money will only be the very last resort. This will realign incentives and make the entire banking system more stable. 4. Capital markets union – the day after tomorrow?