Where next for Europeâs banking union?

November 4 marked an important milestone in the Eurozone — the ECB took on direct supervision for the 120 largest banks and indirect supervision for all other banks. This came after a rigorous one-year examination of these banks’ books and subjecting their financial situation to different stress scenarios.1 Compared to the discussions right after the onset of the Global Financial Crisis in 2008, this is quite some progress. Six year ago, economists suggesting that the EU or Eurozone would need a single financial safety net were laughed out of the room by lawyers who pointed to the need for a treaty change and the political impossibility to do so. Six years and no treaty change later, the step towards a single supervisory mechanism can therefore be seen as quite an achievement towards a banking union matching the idea of a Single Market in Banking in Europe. On the other hand, the single supervisory mechanism has not been matched with similar progress on the resolution of weak banks on the European rather than national level, and there has been no move on connecting or joining the deposit insurance schemes across the Eurozone. A banking union on one and half pillars compared to the ideal of three pillars; a glass half full or half empty?