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Europe's banking union

Banking union was created to ensure that banks are stronger and better supervised and, should problems arise within the financial sector, to resolve, i.e. restructure, the banks more efficiently. It consists of:

  • a Single Supervisory Mechanism (SSM), which is a system for European banking supervision comprising the European Central Bank and the national supervisors of the euro area and other participating countries;
  • a Single Resolution Mechanism (SRM), which is to ensure the efficient resolution of failing banks in the countries participating in the SSM at minimal costs to taxpayers and to the real economy. The SRM is supported by a single resolution fund which is to be used in resolution procedures where necessary to ensure the effective application of the resolution tools.

The SSM and SRM apply a single rulebook, a set of uniform rules to regulate, supervise and govern the financial sector in all countries more efficiently. It is complementary to the banking union and also ensures a uniform level of protection for savers by guaranteeing their bank deposits up to €100,000.

Banking union ensures that these rules are implemented consistently across the euro area and in other participating countries.