The reforms of the financial union aim for reducing risks as well as more risk-sharing. This shall be achieved by rules for banks relating to their Insolvency, restructuring, second chance tools, and non-performing loans. Risks shall further be reduced by addressing the financial sectors of the Member States in the form of specific recommendations in the European Semester. In addition, the Banking Union shall be completed by the creation of a common fiscal backstop as a last resort tool for the Single Resolution Fund and the European Deposit Insurance Scheme. A related proposa was issued by creating a credit line from the proposed future European Monetary Fund. Furthermore, the interconnection between banks and sovereigns is aimed to be cut by the creation of so-called “Sovereign Bond-Backed Securities” (SBBS) issued by a commercial entity or an institution, which European banks can invest in, allowing them to diversify away from their own government bonds.
Prof. Grotsos, University of Athens, is outlining the institutional and legal aspects of the banking union and is tackling among others the above mentioned reform initiatives.