The legal history of the banking union

Abstract

This article provides a brief legal history of the Banking Union since the first steps towards a single financial market in the mid-1970s. It identifies four phases of legal and institutional evolution before the Banking Union. While reflecting the spirit of the time in the approach to market integration, each phase is defined by the equilibrium reached between the expansion of European competences and the safeguarding of national sovereignty. The transition from an equilibrium to another was made by introducing legal and institutional innovations to deepen integration. Such innovations were often at the boundaries of what could be achieved under the Treaty. The Banking Union, which comprises thus far the Single Supervisory Mechanism and the Single Resolution Mechanism, follows the same pattern. Its design is the outcome, on the one hand, of the legal possibilities offered by the Treaty and, on the other, of the tension between European competences and national sovereignty. As concluded at the end, it encapsulates many of the trends in European integration since the financial crisis erupted in 2007.