2  incentive-compatible resolution framework, aims at reducing moral hazard; it can also  preserve financial stability, so long as adequate provision is made for the eventual use of a public backstop for large and complex financial institutions. 2 The third pillar, a common  deposit insurance scheme, would lower the probability of systemic stresses by closing off the channels of contagion, i.e.
it would provide an effective buffer against a large number of  country-specific shocks, thereby lowering the likelihood of bank runs and overall systemic risk. If the Banking Union were to remain as it is today, the result would neither be compliant  with best practices, nor would it have achieved its intended effects.