This naturally required that supervision would have also to be transferred to the European level and the embryo of Banking Union saw the light of day. Later, the Van Rompuy Report elaborated the concept by adding a Single Resolution Mechanism and a future possible Deposit Guarantee Scheme.
In the meanwhile it was clarified that European direct recapitalisation could only happen after the Single Supervision Mechanism would become operating and after a comprehensive assessment of the banks’ balance sheets would be conducted. This is because direct recapitalisation would not be used to cover bad legacy assets stemming from the crisis.