The banking union had to be the first step of a longer sequence, for two reasons. First, because it was necessary to consolidate the single currency. Second, because it provided an opportunity to “reboot” the euro area banking system, which in turn is a pre-condition for the recovery. Let us consider the two in sequence.
It was a remarkable achievement that the creation of a credible Monetary Union allowed market interest rates to converge towards the levels of the legacy currencies inspiring the maximum level of confidence and therefore having the lowest market interest rates, and not just to the average level.