ABSTRACT
Under the Single Resolution Mechanism(SRM), a euro area wide single resolution authority has been created and a gradually communalised single bank resolution fund has been established for the euro area countries and other European Union(EU) members. Either the EU should decide, within a very short period of time, to implement a true European banking union or it would be preferable to reintroduce supervision, recovery and resolution at the national level. The EU has introduced a Single Supervisory Mechanism(SSM) housed in the European Central Bank(ECB). The ECB in its role as the overall supervisor, aided by national supervisors for smaller banks, would give the alarm when a bank supervised under the SSM mechanism finds itself in trouble and is likely to fail. Deposit insurance in the EU for all countries was only introduced in 1995 and was untested. Having recovered from the financial crisis itself, profitability in the European banking sector suffered as a result of the sovereign debt crisis.
