By Charlotte GAUCHON
6 May 2025
A bank failure may seem like a distant event, but its repercussions have the potential to affect every citizen. In order to prevent systemic financial crises, such as the one in 2008, and to safeguard depositors' savings without taxpayers having to pay, Europe has set up the Banking Union and its resolution mechanism. How does this mechanism work and what protection does it offer in practice? This article sheds light on how it works and the guarantees it provides. Banking Union: a strengthened supervisory and resolution framework Banking Union was designed to harmonise the supervision of banks within the eurozone and other participating member countries, and to manage bank failures in an orderly fashion. It is based on essential pillars designed to ensure the solidity of the sector. The Single Supervisory Mechanism (SSM): supervision by the ECB At the heart of the Banking Union, the Single Supervisory...
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