Polio or premeditated murder: the curious case of the Eurozone's Banking Union

Abstract

In this paper, we put under scrutiny the blueprint of the Eurozone's banking union in trying to confront and contrast the shortcomings of the currency union and malaise of the euro-crisis at hand with the aims, instruments and scope of the banking union itself. After investigating direction of causality between the weak banking sectors and the week sovereign (public) finances, we go on to rectify both the objectives and design of the Eurozone's banking union (EBU). This paper argues that EBU has been deployed to deal with wrong problems equipped with ill-suited tools, which accounts for its early paralysis. However, the fact that leading members of the Eurozone hastily passed national legislation which exempts their strategically important banks from the outreach of the European Banking Authority they themselves have just established, casts doubt that the aforementioned financial polio may disguise something much more sinister coming up. One way or the other, we claim that the EBU stands no chance whatsoever without further "federalisation" of the E(M)U, although its functional survival may be arranged both with and without Germany's continued participation.