*  *  *  Summary The banking union can be seen as the biggest European reform after the inception of the euro, with vast implications that go well beyond the problem of the sovereign-bank loop. It is a structural and institutional step with wide implications for the deepening of European integration.
Its two key elements – the Single Supervisory Mechanism and the Single Resolution Mechanism – will help address the negative loop between banks and sovereigns, notably by means of direct recapitalisation of European banks that would not overburden already indebted sovereigns. Another important objective of banking union is to overcome financial fragmentation and promote financial integration.