Development of the European Banking Union and barriers to its completion: A brief review

Abstract

The European Banking Union aims to integrate and stabilize European banking systems, yet it remains incomplete nearly two decades after the 2008 crisis. This paper reviews key legislative milestones and synthesizes the academic literature on the development of the Banking Union. The literature identifies the absence of a European Deposit Insurance Scheme as the central missing pillar. The core obstacle is a distributive conflict over risk sharing: Germany and allied creditor states prioritize risk reduction, while several Southern member states favour risk sharing. EU-level negotiations, therefore, continue to centre on identifying politically feasible compromises between risk reduction and risk sharing. Recent progress is reflected in advancing talks on the Crisis Management and Deposit Insurance reform package. The article provides a political economy-informed synthesis of the dynamics that have delayed completion. It focuses on national preferences, institutional constraints, and recent policy sequencing.