The political economy of the European banking union

Abstract

Banking union has become the most spectacular result of the reform of European economic governance. The article demonstrates that the institutions and mechanisms of the European banking union can be interpreted as the outcome of a bargaining process amongst the member states of the union; that is, preferences of member states largely determined how the supranational level of the EU has been strengthened. It is most likely that the endresult is not a first-best solution as it was the outcome of a series of compromises.