The Banking Union (BU) was created as a response to the financial crisis and is an essential complement to the Economic and Monetary Union (EMU) and the internal market, which aligns responsibility for supervision, resolution and funding at EU level and forces banks across the euro area to abide by the same rules. In particular, these rules ensure that banks take measured risks and that failing banks can be resolved in an orderly manner, with as little impact as possible on the real economy and public finances of the participating EU countries.
The Banking Union currently has two elements, the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM). The SSM supervises the largest and most important banks in the euro area directly at European level, while the purpose of the SRM is to resolve failing banks in an orderly manner with minimal costs for taxpayers and for the real economy.
The EP is currently following the recent developments on the EU and US markets with the failure of the Silicon Valley Bank and the implications for financial stability in Europe or the UBS’s rescue of the Bank Credit Suisse in Switzerland.