Improving and harmonising national insolvency laws, for example, goes to the very heart of our legal systems. But it is capital well invested. Risk sharing by private investors reduces the need for public risk sharing and for the protracted and acrimonious discussions that often ensue. A capital markets union can’t function without European-level supervision of systemic intermediaries and infrastructures.
There are large cross-border spillovers and, if things go wrong, the banks that are directly supervised by the ECB would be left bearing most of the financial risk. Recent reforms of the European supervisory authorities and of the European market and infrastructure regulation (EMIR) were missed opportunities.