The SRM structure is explicitly based on the principle that any losses are to be borne by shareholders and creditors and that any public assistance should only be transitory and be recouped by means of ex post levies on the banking sector.
By improving private risksharing, the banking union will importantly sever the link between financial system instability and resulting threats to fiscal sustainability of individual euro area countries, especially smaller ones. The high risk premiums some banks faced in refinancing markets meant that they did not benefit from the low interest-rate environment provided for by the accommodative monetary policy stance of the ECB.