ABSTRACT
This chapter outlines the European banking union, followed by an analysis of the short run pressures it faces. It considers the longer run difficulties, pressures and indeed global financial system that banking union will have to cope with. Banking union is a label being applied to a group of three main actions by the European Union(EU). The first action is, increased harmonisation and the implementation of the Basel 3 rules for capital adequacy. The second action is the creation of Single Supervisory Mechanism(SSM), based on European central bank(ECB). The third action, the establishment of a regime for being able to resolve all banks, whatever their complexity. Kate Phylaktis considers the banking problems of Cyprus and their implications for European banking union. A plan was first agreed on 16 March. This plan included a bail-in of all depositors, insured as well as uninsured, in all Cyprus banks. However, at some point the debt ratio reaches an equilibrium.
