The European banking union was created at the height of the euro crisis to protect public finances against the consequences of failing banks. As such, it purports to remedy weaknesses that were unforeseen when the Economic and Monetary Union (EMU) was conceived.
Bringing together supervision and resolution of banks in a common framework, the banking union is mandatory for the euro member states. Non-euro countries may however join the banking union by establishing a so-called close cooperation with the European Central Bank (ECB). Several non-euro countries are currently pondering membership, including Sweden.
According to Dominique Ritleng, Professor of EU Law, their legal situations will however differ, as the ECB lacks directly applicable powers over supervised banks in those countries.
As the author demonstrates, non-euro Member States who choose to join the banking union will have to comply with the ECB's legal acts on supervision of credit institutions. This binding force rests on the voluntary basis. There are nonetheless limits to the ECB's competences:
- Non-euro Member States will not be bound by acts of the ECB to which they object.
- The ECB's acts must be carried out by a national competent authority.
This shared competence may however pose problems of judicial accountability, as well as difficulties to allocate liability for damages suffered as a result of a supervisory procedure.