In principle, the banking union – which encompasses European-level banking supervision – is a useful addition to European monetary union. Its main aim is to ensure that the euro-area financial system is more stable in the future, and that will also benefit the euro area’s single monetary policy.
But the associated uncertainty has affected the financial conditions in many emerging markets, particularly those with current-account deficits. Furthermore, the start of interest-rate normalisation will not do away with uncertainty completely, as the focus will then move to the next meeting.