ABSTRACT
In the European Union (EU), banking integration can be considered a fundamental pillar of the financial regulatory framework. As part of the creation of a single market, the Commission launched a vast programme of harmonisation to ensure the free movement of financial services while reducing barriers among Member States. Specifically, the EU legislators aimed to develop an internal market in which banks could trade their products according to harmonised prudential standards and home State authorisation. This chapter examines the regulatory structures which exist at the EU level for regulating banks. It considers the role of European Central Bank (ECB) and its new supervisory role in the Eurozone. The focus of this chapter is on the historical background of EU banking regulation, on the broad policy goals which underlie it and on the recent reforms at the EU level for bank products. It also discusses the introduction of the Banking Union and Single Supervisory Mechanism. The chapter concludes by arguing that co-operation and co-ordination between supervisory authorities are necessary for realising effective harmonisation of macro-prudential policies.
