Grundmann micklitz (eds ) the european banking union and constitution; beacon for advanced integration

THE EUROPEAN BANKING UNION AND CONSTITUTION In 2012, at the height of the sovereign debt crisis, European decision makers pushed for developing an ‘ever closer union’ with the formation of a European Banking Union (BU) Although it provoked widespread debate, to date there has been no coherent discussion of the political and constitutional dimensions of the European Banking Union This important new publication fills this gap Drawing on the expertise of recognised experts in the field, it explores banking union from legal, economic and political perspectives It takes a four-part approach Firstly, it sets the scene by examining the constitutional foundations of banking union Then in parts and 3, it looks at the implications of banking union for European integration and for democracy Finally it asks whether banking union might be more usefully regarded as a trade-off between integration and democracy This is an important, timely and authoritative collection ii  The European Banking Union and Constitution Beacon for Advanced Integration or Death-Knell for Democracy? Edited by Stefan Grundmann and Hans-W Micklitz HART PUBLISHING Bloomsbury Publishing Plc Kemp House, Chawley Park, Cumnor Hill, Oxford, OX2 9PH, UK HART PUBLISHING, the Hart/Stag logo, BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc First published in Great Britain 2019 Copyright © The editors and contributors severally 2019 The editors and contributors have asserted their right under the Copyright, Designs and Patents Act 1988 to be identified as Authors of this work All rights reserved No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers All UK Government legislation and other public sector information used in the work is Crown Copyright © All House of Lords and House of Commons information used in the work is Parliamentary Copyright © This information is reused under the terms of the Open Government Licence v3.0 (http://www.nationalarchives.gov.uk/doc/ open-government-licence/version/3) except where otherwise stated All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2019 A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication data Names: Grundmann, Stefan, 1958-, editor.  |  Micklitz, Hans-W., editor Title: The European banking union and constitution : beacon for advanced integration or death-knell for democracy? / edited by Stefan Grundmann, Hans W Micklitz Description: Portland, Oregon : Hart Publishing, 2019 Identifiers: LCCN 2018044173 (print)  |  LCCN 2018045920 (ebook)  |  ISBN 9781509907564 (Epub)  |  ISBN 9781509907540 (hardback) Subjects: LCSH: Banks and banking—State supervision—European Union countries.  |  Banking law—European Union countries.  |  European Central Bank Classification: LCC KJE2189 (ebook)  |  LCC KJE2189 E97 2019 (print)  |  DDC 346.24/082—dc23 LC record available at https://lccn.loc.gov/2018044173 ISBN: HB: 978-1-50990-754-0 ePDF: 978-1-50990-757-1 ePub: 978-1-50990-756-4 Typeset by Compuscript Ltd, Shannon To find out more about our authors and books visit www.hartpublishing.co.uk Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters CONTENTS Contributors��������������������������������������������������������������������������������������������������������������� vii List of Abbreviations��������������������������������������������������������������������������������������������������� xi The European Banking Union and Constitution – The Overall Challenge���������1 Stefan Grundmann and Hans-W Micklitz PART I SOME CONSTITUTIONAL FOUNDATIONS OF EUROPEAN BANKING UNION The Constitutional Dimension of Banking Union����������������������������������������������25 Takis Tridimas The Thin Red Line Between the OMT Decision and the Banking Union����������49 Alessandro Busca PART II EUROPEAN BANKING UNION AND FULL INTEGRATION The European Banking Union and Integration���������������������������������������������������85 Stefan Grundmann Banking Union and the European Economic Constitution: A Brief Comparison of Regulatory Styles in Banking Regulation and Competition Law����������������������������������������������������������������������������������������121 Heike Schweitzer Technocratic and Centralised Decision-making in the Banking Union’s Single Supervisory Mechanism: Can Single Market and Banking Union Governance Effectively Co-exist in a Post-Brexit World?���������������������������������141 Niamh Moloney Single Resolution Board: Lost and Found in the Thicket of EU Bank Regulation��������������������������������������������������������������������������������������169 Agnieszka Smoleńska vi  Contents PART III EUROPEAN BANKING UNION, DEMOCRACY AND TECHNOCRACY Some Reflections on the State of European Democracy with Regard to the Banking Union and the ECB�������������������������������������������������������������������205 Christoph Möllers The European Banking Union: A Case of Tempered Supranationalism?��������219 Sergio Fabbrini and Mattia Guidi 10 Prudential Supervision and the European Central Bank Credit Data Registry (AnaCredit): Legal Basis and Democratic Accountability��������239 Federico Ferretti 11 The Internal Market and the Banking Union���������������������������������������������������267 Hans-W Micklitz 12 Should Non-participating Member States Join the Banking Union? A Legal Perspective��������������������������������������������������������������������������������������������293 Dalvinder Singh Index��������������������������������������������������������������������������������������������������������������������������309 CONTRIBUTORS Busca, Alessandro is a PhD doctorate from the European University Institute He holds a law degree from the University of Bologna magna cum laude, and holds a master degree LL.M from the University of Chicago Law School He has worked in a number of international institutions and international law firms Fabbrini, Sergio is the Director of the School of Government and Professor of Political Science and International Relations at the LUISS Guido Carli ­University Rome, where he holds a Jean Monnet Chair He was the editor of the Italian ­Journal of Political Science from 2003 to 2009 He is Recurring Visiting Professor of Comparative Politics at the Department of Political Science and Institute of Governmental Studies, University of California, Berkley Federico, Ferretti is an Associate Professor in Economic and Financial Markets Law, Department of Sociology and Business Law, University of Bologna (Italy) Qualified Lawyer of the High Courts of Italy Formerly, Senior Lecturer in Law at Brunel University London (UK) Member of the Financial Services User Group (FSUG) of the European Commission, advising the Commission in the preparation of legislation or policy initiatives which affect the users of financial services, providing insight, opinion and advice concerning the practical implementation of such policies, proactively seeking to identify key financial services issues which affect users of financial services, and liaising with and providing information to financial services user representatives and representative bodies at the European Union and national level Grundmann, Stefan is a Professor of European and International Private and Economic Law at University of Humboldt and a Professor of Transnational Private Law at European University Institute He has held chairs of German and International Business Law at the universities of Halle-Wittenberg (1995–2001) and Erlangen-Nürnberg (2001–2004) before he went to Humboldt-University in 2004 He is founding president and current president of the Society of European Contract Law (SECOLA), president of the Luso-German Lawyers Association, co-founder and president of the steering committee of the European Law School and director of several institutes in the universities where he holds or held chairs He is a member of the board of the German Society of Comparative Law, head of the section ‘Fundamental Theory’, and as such also a member of the International Academy of Comparative Law (Académie Internationale de Droit Comparé) Moreover, he is member of the European Law Institute and was also member of its council viii  Contributors Guidi, Mattia is assistant professor in political science at Scuola Normale Superiore (Florence) His research focuses on delegation and institutions, independent regulatory agencies, EU competition policy and EU macroeconomic governance He has published articles on several international journals, including JCMS: Journal of Common Market Studies, Regulation & Governance, European Union Politics, European Political Science Review, Acta Politica, Comparative European Politics, and book chapters for the publishers Palgrave MacMillan and Routledge His monograph Competition policy enforcement in EU member states (2016) is published by Palgrave MacMillan in the European Administrative Governance series Micklitz, Hans-W is Professor for Economic Law at the European University Institute in Florence and Finland Distinguished professor at the University of Finland He held a Jean Monnet Chair of Private Law and European Economic Law at the University of Bamberg and is Head of the Institute of European and Consumer Law in Bamberg/Berlin He took Studies of Law and Sociology in Mainz, Lausanne, Geneva, Giessen and Hamburg He has acted as a Consultant for ministries in Austria, Germany, the UK, the European Commission, OECD, UNEP Geneva/Nairobi, the Gesellschaft für Internationale Zusammenarbeit and national European and international non-governmental organizations He was Visiting Scholar at the University of Michigan, Ann Arbor; Jean Monnet Fellow at the European University Institute Florence; Visiting Professor at the Somerville College at the University of Oxford and at Columbia University New York; he won an ERC Grant 2011–2016 on European Regulatory Private Law Möllers, Christoph Dr jur (Munich), LL.M (Chicago) is a Professor of Public Law and Jurisprudence, Faculty of Law, Humboldt-University Berlin He was a Fellow at NYU School of Law and at the Wissenschaftskolleg zu Berlin He is a member of the Berlin-Brandenburg Academy of Sciences Since January 2011 he has acted as a judge at the Superior Administrative Court in Berlin From April 2012 he became a Permanent Fellow at the Institute for Advanced Study His main interests include German, European and comparative constitutional law, regulated industries, democratic theory in public law, and the theory of normativity Moloney, Niamh is a Professor of Financial Markets Law, London School of Economics and Political Science Her research areas include EU financial market regulation, consumer financial protection regulation, institutional governance of financial markets, particularly the EU’s institutional arrangements including the European System of Financial Supervision and Banking Union She is a fellow of the British Academy and sits on the Board of Appeal of the European Supervisory Authorities Schweitzer, Heike is the Chair for Private Law and European Economic Law, Competition Law and Regulatory Law at the Freie Universität Berlin; Director of the Institute for German and European Economic Law, Competition Law Contributors  ix and Regulatory Law; Director of the Master Program for Business, Competition and Regulatory Law (MBL-FU) In 2017, she became the Special Advisor to EU Commissioner Vestager on Competition Policy Singh, Dalvinder is a Professor of Law at the University of Warwick, School of Law He is an author and editor of several monographs and a number of research papers on banking supervision Managing Editor of the Journal of Banking Regulation, since 2003 and Financial Regulation International, since 2006; he was invited in 2008 to be a member of the International Association of Deposit Insurers, Research and Guidance, Expert Advisory Panel He has participated in numerous international academic conferences, workshops and high-level policy seminars in financial regulation and supervision He has delivered training for central banks and regulatory staff for Central Bank Publishing Ltd, and in-house training on UK and US financial regulation at Bank of America – MBNA He was Fernand Braudel Senior Fellow, EUI, 2016 He is currently working on a monograph titled, European Cross-Border Banking and Supervision, Oxford University Press, 2019 Smoleńska, Agnieszka is a Research Associate with the Florence School of Banking and Finance and a PhD Researcher at the European University Institute She coordinates the Young Researchers Group of the European Banking Institute She has taught and published on EU financial regulation matters She holds a BA in European Social and Political Studies (University College London), an MA in European Interdisciplinary Studies (College of Europe) and a Diploma in Economic Policy from SOAS Professional experience includes the European Commission (2010–2011) and the European Parliament (2011–2014) Research interests: EU financial governance, cross-border banking, EU competition and company law Tridimas, Takis is Professor of European Law at the Dickson Poon School of Law of King’s College London and Director of the Centre of European Law He is also the Nancy A Patterson Distinguished Faculty Scholar and Professor at Pennsylvania State University and a Visiting Professor at the College of Europe, Bruges He has acted as advisor to many public and private organisations, including the European Central Bank, the European Parliament, the European Commission and the EU Court of Auditors He was senior legal advisor to the EU Presidency (2003) and Chairman of the Committee set up by the EU Council of Ministers to draft the Treaty of Accession of 2003 by which ten new States joined the EU He is a barrister of England and Wales and a qualified advocate in Greece 304  Dalvinder Singh Evaluation Process (SREP) system would be available to the small host, this would minimise the potential problems of asymmetry of information between large and small Member States As already mentioned above, legal entities of banks located in the non-­ participating Member States would be unlikely to be significant, mostly because of asset size They could be considered significant due to the other criteria used to designate a bank as significant, namely the size of the bank relative to other banks in the Member State or the level of cross-border presence in other participating Member States For example, consider the exposure of Member States in the region to OTP Bank, a Hungarian bank present in Bulgaria, Croatia, Poland, Romania and Slovakia In this case, the Hungarian authorities could in close cooperation surrender responsibility as the home supervisor to the ECB who would be the consolidated supervisor for the group, with an impact on cooperation with authorities of other non-participating Member States, given the bank’s significant cross-border banking presence However, if OTP’s presence in those Member States was not considered material to the banking group as a whole then OTP could be supervised as a significant bank because it is one of Hungary’s three largest banks Moreover, in the case of Poland, the largest Member State in the non-participating Member State category (post Brexit31) is unlikely to experience a significant shift of banks to the SSM arrangement At most it would see its top three largest banks move, according to recent figures regarding the size of assets of Polish banks.32 The CEE Member States provide another interesting dilemma for the Banking Union While foreign banks are a crucial part of the banking system in their respective markets, they are unlikely to command the same commitment by the host authorities as would local domestic banks, since they are not the Member State’s ‘national champions’.33 The experience from the global financial crisis is one of Member States and their central banks standing behind their respective national champions, meaning that in the CEE markets such political commitments may not be forthcoming The Banking Union is not proposing to rein in integration and jeopardise the benefits of cross-border banking On the contrary, it is attempting to centralise supervision in order to better address the asymmetry of information problems of supervising and resolving cross-border banks in the different participating Member States.34 In view of this centralisation, financial support is necessary in 31 Ie after the withdrawal of the UK from the EU 32 Leading banks in Poland as of 4th quarter 2017, by total assets (in million Polish zloty): https:// www.statista.com/statistics/765766/leading-banks-poland-assets 33 Nicolas Véron, Banking Nationalism and the European Crisis, “The Transformation of Europe’s Financial Landscape” at the 30th Anniversary Symposium of the European Private Equity and Venture Capital Association (EVCA) in Istanbul, Turkey, on 27 June 27: https://piie.com/publications/papers/ veron20130627.pdf 34 C Holthausen and T Rønde, Cooperation in International Banking Supervision, Working Paper Series, NO 316 / MARCH 2004 https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp316.pdf?0bf69eb3 82026645f9754a6df187eee5 Should Member States Join the Banking Union?  305 order to develop the economies of scale for the financial arrangements to support resolution options The move to pool resources should theoretically reduce conflicting incentives between the home and host Member States, and more specifically between large and small Member States, since the cost of resolution is likely to be different from the home and host perspective and since centralisation of supervision is not going to be enough to incentivise cooperation and coordination at the resolution level III.  Wider Ramifications of Opting In or Out of the Banking Union The Member States which not participate in the Banking Union are varied and the benefits of opting in to the Banking Union need to be assessed on a caseby-case basis, since the move to close cooperation, as shown above, does not in practical terms create a level playing field between the Eurozone and those which may eventually decide to enter into close cooperation Ultimately, the linchpins are those non-participating Member States which move to adopting the euro in place of national currencies once they meet the convergence criteria It would be for the Council to decide whether those non-participating Member States have met the convergence criteria This decision would ultimately be superseded by the political will of the Member State to adopt the euro In this respect, the European Union consists of a number of subcategories of Member States, albeit there is sovereign equality in its legal foundations There are a number of considerations Member States should take into account before deciding on opting in Since the criteria are not completely transparent, albeit having sound banks and be trusted to undertake supervision is a good starting point, opting in is not a matter of right since it is the ECB that ultimately decides on this Moreover, the ability to formally showcase Member States entering into close cooperation is a signal of the ECB’s movement in a relatively short period of time towards building the reputation of being a credible supervisory authority The counterfactual is also evident, and the reluctance of Member States to enter close cooperation also signals a lack of confidence in the credibility of the ECB as a single supervisory authority, or doubts over its double role as also responsible for monetary policy for the Eurozone This results in perhaps the most important obstacle to opting in, where the governance arrangements of the ECB, notably the Governing Council, not allow for a seat for non-euro Member States This is partly addressed by enabling Member States in close cooperation to attend Governing Council meetings relating to Supervisory Board decisions when the Governing Council is of the view that the Member State in question is likely to challenge the draft supervisory decision by the Supervisory Board This is useful since it will enable the Member State to put forward its position before the Governing Council, which is generally not possible for a non-Eurozone Member 306  Dalvinder Singh State The leverage the ECB has, however, is the right to terminate the close cooperation, even if that right is shared with the opting in Member State as well But it could also signal the need for the Member State to build up the capacity and resources to demonstrate it can put a credible case forward to the ECB to enter close cooperation If one were to be elitist about the type of Member State entering close cooperation, the larger the non-participating Member State the better for the reputation of the ECB as a supervisor In view of the significant presence of EU foreign banks in the Eastern European banking market, the home and host relationship becomes very important The relatively unique position of the ECB acting as the home and the host, will be a very important factor in considering close cooperation, as it is likely to mean fewer obstacles and challenges of cooperation and coordination within the Eurozone A prospective participating Member State needs to reflect on the level of discretion it is likely to lose with the transfer of supervisory decision-making to the ECB While it is assumed that competent authorities will cooperate with one another and share information on reciprocal basis, in practice this is not always forthcoming This is a concern when it specifically relates to capital and liquidity levels It is important to consider how the underlying legal framework can propagate the home host challenges and home bias despite there being a single centralised supervisor For example, if the ECB is acting as the consolidated supervisor for a significant bank within the Eurozone, the underlying model of consolidated supervision explicitly requires that the host State supply information and data to the ECB associated with a range of Capital Requirements Regulation, Regulation No 575/2013 (CRR) matters However, the host State in this relationship is required to ‘request’ that information under the legal framework for its own purposes, ie to better supervise the subsidiary that is part of the group, especially where home State cooperation was not always forthcoming Under the Banking Union, the ECB will also act for the host so there should be improvements in term of asymmetry of information But the purpose of consolidated supervision is aimed at the interests of the group, which is likely to make the parent’s position and indeed the leverage to influence matters that much greater on the whole, side-lining the views of the Member State where a subsidiary is located but that subsidiary being immaterial to the safety and soundness of the group In the countries under consideration this is an acute problem, since the CRD IV and CRR frameworks and technical standards provide the consolidated supervisor significant discretion to act in the interests of the group rather than in a reciprocal manner Finally, a dilemma exists with the transfer of decision making to the ECB and SRB when it comes to failing institutions and planning for resolution options and assessing the best options for the local circumstances While a Single Point of Entry resolution strategy may be in place for the core part of the group, that does not negate the fact that the peripheral parts may be required to have a separate Multiple Point of Entry strategy in the form of insolvency The benefits of centralised decision making in close cooperation would be a clear awareness of these decisions ex ante and the ability to prepare for such options The decision as to whether the bank Should Member States Join the Banking Union?  307 offers critical functions regardless of whether it is significant or less significant is another challenge at the heart of how banks need to be managed when they are experiencing problems The NCA and NRA may be of the view that the bank is undertaking critical functions for the purpose of being classed an O-SII and it should equally be considered to be offering critical functions for the purposes of resolution as well However, the SRB may decide otherwise when deciding on whether a bank should be dealt with in resolution or insolvency based on recent decisions,35 see Table 12.1 However, again, the SRB would assess such options with the NRA in the resolution plans, so it is not as if the NRA would be in the dark on such matters Table 12.1  SRB Resolution Decisions Name of bank Resolution – Liquidation – ECB significant Other bank systemically within public outside public interest interest important threshold threshold institution Monte dei Pasche di Siena ✓ ✓ ✓ × Banco Popular Espol ✓ ✓ ✓ × Banca Popolare di Vicenza SpA ✓ × × ✓ Veneto Banca SpA ✓ × × ✓ ABLV Bank Latvia (parent) ✓ ✓ × ✓ ABLV Bank Luxembourg (subsidiary) × × × ✓ The ECB relationship with a Member State in close cooperation as shown in Table 12.1 is akin to the agency relationship that the SRB exercises with Member States in the Banking Union In view of this, those Member States in close cooperation will have transferred decision making for supervision and resolution to a centralised body but the NCA and the NRA retain responsibility for executing those decisions The benefit of close cooperation, in many respects, is access to the single resolution fund and the proposed European single deposit guarantee fund (EDIS), once it is in place, as lines of defence during a crisis Those should go some way to minimise the risks of home bias especially when the level of foreign 35 See J-H Binder, M Krimminger, M Nieto and D Singh, ‘The choice between judicial and administrative sanctioned procedures to manage liquidation of banks: A transatlantic perspective’, unpublished manuscript, 2018 308  Dalvinder Singh bank presence in those markets give rise to a significant interconnection risk They could also go a long way to minimise the risk of the host authority deciding ex post to ring-fence activities of the group operating in their jurisdiction to reduce local damage In view of the importance of funding during a crisis, access to the SRF and EDIS go a long way towards minimise local bias in order to support orderly cross border resolution or payout and protect depositors in the interests of both the home and host State INDEX NB – Page numbers in bold refer to information in tables and those in italics refer to information in figures accountability, 19–20 AnaCredit, 261–65 ECB, 14, 17, 19, 94, 96–97, 213–15 European Parliament, to, 75, 113, 115–16, 149, 216–17 EU institutions, to, 231 parliamentary accountability, 216–17 SSM-specific accountability regime, 148–49, 155–56 institutional design and accountability concerns, 170–71 internal market and banking union compared, 268, 279–80, 284 OMT programme, 75–76, 284 SRB: inter-institutional accountability, 173–75, 190–91 MREL amounts, 192 SRM, 196–99 SSM, 200 adjudication in banking supervision, 88, 114–15, 120 administrative centralisation, 11 advantages/disadvantages of centralisation, 119 ‘costs’ from non-homogeneous supervision, 108–9 negative externalities caused by regulatory arbitrage, 107–8 negative externalities caused by supervisory failure, 106–7 competition law compared, 12, 101–2 SSM, 13–14 agency powers, see ESMA case; Meroni doctrine Asset-Backed Securities Purchase Programme (ABSPP), 68–69 bail-ins, 26 MREL, 178, 191–92 resolution policy, 180, 182 rights of individuals, 42–43 Single Resolution Fund backstop, 26, 131 SRM, 132, 233 bail-outs, 13, 177 Art 125 TFEU: no bail-out clause, 27, 53 bond purchases, 76, 81 ESM, 78 exacerbation of Euro crisis, 106–7, 119 liquidity crisis, 50 – 53, 73, 81 moral hazard, 130 OMT, 270 rights of individuals, 42–43 Single Resolution Fund, 131, 273 SRM, 38, 132 Bank Recovery and Resolution Direction (BRRD), 2, 4, 89 harmonisation rules, 4, 11, 42, 91, 117–18 MREL, 192 recovery plans: early intervention, 193–94 SRB, 185, 192 Single Resolution Fund, 40, 42 SRM, 92–93, 128, 175, 180, 220, 222–23, 228, 275, 278 Single Rulebook, 71, 103, 128, 175, 290 transposition into national law, 89 Banking Credit Data Registry (AnaCredit), establishment, 239, 243–44 legal basis, 261–62 Art 127(6) TFEU, 241 Art Statute ESCB, 262 Art 5(4) TEU, 264 Art 294 TFEU, 265 Decision of the ECB (6/2014), 262, 263 Draft Regulation of the ECB, 262–64 Ombudsman’s considerations regarding legal basis, 263 SSM Regulation, 241, 262–63 mandate, 243 processing of personal data, 264 310  Index banking groups: ‘costs’ from non-homogeneous supervision, 108–9 deliberation on banking groups, 178 ECB supervision, 72, 146–47, 162, 232 joint supervisory teams, 151, 301 banking supervision generally, 3–5 centralisation of, 8–9 full independence, 96–97 see also Single Resolution Mechanism; Single Supervisory Mechanism banking union defined, 25–26 Basel III, 71, 73, 97, 113, 127, 153, 278 Regulatory Consistency Assessment Programme, 160 bond purchase programmes, 61–68, 76–77, 273 bail-outs, 76, 81 covered bond purchase programmes, 50 lenders of last resort, 80, 81 Brexit: impact on influence of ECB, repercussions on SSM, 14, 144–45 EBA and banking governance, 156–59 post-Brexit banking governance, 164–67 BRRD, see Bank Recovery and Resolution Direction capital distribution: SRM, 212–13 Capital Requirements Directive (CRD) IV, 2, 3–4, 71, 306 application, 98 application of national implementing law, 33 Basel III, 127, 153 capital buffers, 303 EBA, 159–60, 164, 167 harmonisation, 11 internal market and banking union compared, 275 MREL requirement, 191 national options and discretions, 152–53 prudential rules, 127 Single Rulebook, 71, 89, 91–92, 103, 175, 290 SSM Regulation, 109, 118, 146, 278 Supervisory Review and Evaluation Process, 144, 162–63 Capital Requirements Regulation (CRR), 3–4, 306 EBA, 159–60, 164, 167 internal market and banking union compared, 275 national options and discretions, 152–53 option rights, 109 prudential supervision, 127 Single Rulebook, 71, 146, 290 Supervisory Review and Evaluation Process, 144, 163 centralisation, 31–32 administrative centralisation, 11 advantages/disadvantages of centralisation, 106–9, 119 competition law compared, 12, 101–2 ‘costs’ from non-homogeneous supervision, 108–9 negative externalities caused by regulatory arbitrage, 107–8 negative externalities caused by supervisory failure, 106–7 SSM, 13–14 advantages of centralisation, 99–100, 106–9, 119 advantages of decentralisation, 100–1, 106–9 banking supervision, 8–9 credit-risk reporting activities, 241–42 SRB, 179–80, 195 SSM, 13–14, 141–45, 167 Charter of Fundamental Rights of the European Union (CFREU): freedom to conduct business, 122, 181, 264 protection of personal data, 264 codes of conduct, 13, 103, 105, 110–11, 118–19, 290 comitology, 276–77, 285, 288 Committee of European Securities Regulators (CESR), 112, 145 competition law, administrative centralisation, 12, 101–2 banking supervision law compared, 20–21, 102–3, 118 private law remedies, 103 concerns surrounding banking union, 26–27 accountability and transparency, 15–17, 96–97, 213–17 administrative centralisation, 11–14, 101–2, 106–9, 119 constitutional concerns, 6–7, 125–26, 129–31 democratic deficit, 15–17, 96–97, 213–17 independence of ECB v democratic accountability, 96–97 interplay between supervisory authorities, 95–96 lack of reach, 94–95 Index  311 constitutional issues associated with banking union, 6, 125–26 balancing EU and national influence of supervision, balancing technocratic expertise and democratic accountability, 6–7 constitutional principles: financial stability, 129–30 market exit in case of failure, 130–31 Germany: Gauweiler/OMT case, 56, 63–69 Court of Justice of the European Union (CJEU): allocation of competences, 17, 38, 42 banking union case law, 43–44 competition law, 20, 115 economic and monetary policy distinguished, 28, 40 enforcement mechanisms, 277 expanding role regarding banking union, 42–44, 277 interpretation of national law, 33 limits to authority of EU institutions, 42 rebus sic stantibus principle, 42 rights of individuals, 42–43 SSM, 38 see also individual cases Covered Bond Purchase Programme (CBPP), 50, 68–69 CRD IV, see Capital Requirements Directive IV credit registries: information collected, 256–57, 258–59 diversity of information, 257–61 negative information, 257 positive information, 257 legal form and structure of registries, 254–55, 254–56 national differences, 251 national registries, 253–54, 255–56 private/commercial registries, 252–53, 255–56 roles, 251–52 see also Banking Credit Data Registry credit-risk reporting activities, 239–40, 265–66 asymmetrical information, 244–45 centralisation of, 241–42 collection and standardisation of data, 243 competitive advantage, 248–50 cost efficiency, 247–48 moral hazard, 246–47 prudential supervision, 250–51 reputation collateral, 247 see also Banking Credit Data Registry CRR, see Capital Requirements Regulation decision-making processes: SRM, 235–36 SSM, 231–32 delegation doctrine, 137–38, 152, 178–79, 183, 199–200, 201, 289–90 democracy, 205 lines of political contestation, 206–7, 217–18 democratic accountability, 6, 94, 97, 115–16 AnaCredit, 239–40, 262, 265–66 democratic deficit of ECB: accountability, 17, 96–97, 213–17 parliamentary accountability, 216–17 transparency, 215–16 democratic legitimacy, 133, 207 delegation of powers to an agency, 137–38, 152, 178–79, 183, 199–200, 201, 289–90 ECB, 207–8, 213–15 independence, 68, 96–97 institutional design of banking union, 18–20, 170–72 OMT case, 73–81 Deposit Guarantee Scheme Directive (DGSD), 71, 129, 278 deposit guarantee schemes, 18, 93, 129, 229, 275 see also European Deposit Insurance Scheme distribution of capital, see capital distribution diversity within the banking union, 119 composition of supervisory teams, 110–11 key features, 109–10 split competences, 111 EBA, see European Banking Authority ECB, see European Central Bank ECB executive board: accountability, 217 dispute settlement, 184 meetings, 178 OMT decision, 55–59, 270 SSM supervisory board, role in, 148, 231 ECB governing council: decision-making, 149–50 governance, 148, 210, 231, 305 irreversibility of the Euro, 78 mediation panel, 232 negative assent procedure, 152 312  Index OMT decision, 54–60, 61–62, 63, 82, 269, 270, 271 risk-sharing regime, 77 silent assent procedure, 148 transparency, 215–16 Economic and Financial Affairs Council (ECOFIN), 237 European Deposit Insurance Scheme, 229–30 Economic and Monetary Union (EMU), 29, 52, 210, 219–20, 233, 237–38 differentiated integration, 30 European Stability Mechanism, 273 internal market, relationship with, 27, 45–46 selective nature, 29 EDIS, see European Deposit Insurance Scheme Emergency Liquidity Assistance (ELA), 185–86 enforcement: administrative enforcement, 15, 18–19 competition law compared, 21, 122, 133–34, 196 ECB as an enforcement authority, 290–91 EU, 132–33, 277, 279, 281, 282, 285–87 internal market, 279, 281, 282, 285–87 MREL, 192–93, 199 national resolution authorities, 190, 276–77 MREL, 192–93 SRB decisions, 178–79, 189 SSM: enforcement of rules, 127–28, 130, 133–34, 146–47 enhanced credit support, 50 equal treatment: differentiated integration, 8, 29–30 financial institutions, 31 member states, 30, 206 ESMA, see European Securities and Markets Authority ESMA case, 9, 10, 39–40, 137–38, 183 EU’s competence, 5–6, 16–19, 31–32 Euro crisis: centralisation of banking supervision, 206–7 law reforms resulting from: application of national law by ECB, 33–34, 46–47 CJEU, role of, 42–44 differentiated integration, 29–30 enhanced role of ECB, 32–34, 38, 44–45, 95–96, 237–38 financial institutions, 31 member states, 30 Single Resolution Fund, 40–42 SRM, 38–40 SSM, 36–38 neoliberalism, 15–16 political contestation, 206–7 price v financial stability, 28 see also Eurozone countries Euro summit 2012, 52, 54, 71, 76, 82 European Banking Authority (EBA), 5, 70–71, 210–11, 220 banking governance post-Brexit, 164–67 ECB, relationship with, 14, 34–35 establishment, 278, 283 quasi-rule-making banking governance, 158–59 lessons learnt, 159–64 Single Rulebook, 14, 91 European Capital Market Union, 38, 44–45, 95–96, 116–17, 120, 261, 237–38 European Central Bank (ECB), 2–3 accountability and transparency, 17, 96–97, 213–17 application of national law, 33–34, 46–47 banking groups, 72, 146–47, 162, 232 Brexit, compatibility with OMT, 63–64 cooperation with non-Eurozone states, 298–301 credit-risk data reporting, see Banking Credit Data Registry; credit registries; credit-risk reporting activities democratic deficit, 5, 208–10 democratic legitimacy, 68, 96–97, 207–8, 213–15 ECB Statute: compatibility of OMT, 63–64 enforcement powers: competition law compared, 133–34 enhanced role, 32 EBA, relationship with, 34–35 independence, 16–18, 68, 96–97, 116, 214–15 interpretation of national law, 33 interpretative discretion, legal status, 21, 208 national competent authorities, cooperation with, 32, 296–97 non-Eurozone member states, 294–95 members wishing to join, 295–98 OMT decision, 54–59, 63–69 prudential supervision, 240–41 Regulation 468/2014, 298 regulator, as, Index  313 rule-making powers, 17 supervision responsibilities, 16–17 transparency: internal deliberations, 215–16 see also ECB executive board; ECB governing council European Commission, 26, 210 AnaCredit, 243 bail-outs, 53 binding technical standards, 71, 96, 288 competition law, 116, 135 decision-making powers, 285–86 delegation doctrine, 156, 160, 178 European Deposit Guarantee Scheme, 121, 129 European Systemic Rights Board, creation, 70 influence, 157–58 internal market, 269–75, 277, 279–80, 284 Mortgage Credit Directive, 260 rule-setting, 112–13 Single Rulebook, 14, 119–20 SSM, 221–22 state aid controls, 131, 196–97 European Council, 17 European Deposit Insurance Scheme, 229–30 OMT decision, 76, 272–73 SRM, 212–13, 223 European Court of Human Rights (ECtHR): shareholder rights, 181 European Court of Justice, see Court of Justice of the European Union European Data Protection Supervisor (EDPS), 264–65 European Deposit Insurance Scheme (EDIS), 4, 89, 93, 121, 129 national parliaments, role of, 18 stalemate, 229–30 European economic constitution, 68, 76, 78, 81–82, 125–26 rights-based model, 123–24 rules-based model, 124 treaties, 123 European Financial Stabilisation Mechanism (EFSM), 52 European Financial Stability Facility (EFSF), 52, 61, 230, 301 European Insurance and Occupational Pensions Authority (EIOPA), 70, 210–11 European Parliament, 16, 42, 220–21 accountability of ECB, 17, 75, 97, 149, 155–56, 163, 166, 216–17 accountability of OMT, 75 adoption of resolution procedures, 226 data protection, 265 financial rule-making, 156 proposal for banking union, 220 New Approach technical standards, 288 right/left divide, 206–7 SRB appointments, 224 SRM, 290 Single Rulebook, 290 SSM, 290 European Securities and Markets Authority (ESMA), 10, 70, 210–11 European Stability Mechanism (ESM), 27, 31, 273 establishment, 52–53 full risk sharing, 77–78 irreversibility of Euro, 78–79 European Stability Mechanism (ESM) Treaty, 41, 52 European Supervisory Authorities (ESAs), 70 competence limitations, 70–71 reform, 145–46 see European Banking Authority European System of Central Banks (ESCB): credit-risk reporting activities, 239–40 centralisation of, 241–42 collection and standardisation of data, 243 see also Banking Credit Data Registry non-Eurozone member states, 294–95 Statute: compatibility of OMT with ECB mandate, 63–64 European System of Financial Supervisors (ESFS), 70, 89, 143 EBA and banking governance, 156–59, 210–11 review of, 143–44 European Systemic Risk Board (ESRB), 70, 156 Eurozone countries: banking supervision standards, 2–3, ECB investigations, 300–1 increased integration, 2, joint supervisory teams, 301 non-Eurozone countries compared, 11, 294–95, 305–6 differentiated integration, 8, 29–30 discrimination, 30 post-crisis reforms, 29–44 relationship with, 21, 45–46 314  Index significant banks, 302 SRM, SSM, 3, 12–13, 298–99 ex ante risk regulation, 77–78, 122, 135, 180–81 bond purchase programmes, 273, 284 European Deposit Insurance Scheme, 229 resolution planning, 198–99 see also Single Supervisory Mechanism Expanded Asset Purchase Programme (EAPP), 68, 77–78 federalism, 13, 15, 26–27, 31, 35, 45, 99–101, 106–7, 206–7 SSM, 210–11 Financial Conduct Authority (UK) (FCA), 105 financial crisis: liquidity shortages, 49–50, 81 covered bod purchase programme, 50 enhanced credit support, 50 longer-term refinancing operations (LTRO), 50 securities market programme, 50–52 Fiscal Compact Treaty, 31, 40–41 financial stability as a policy aim, 180–81 Gauweiler case, 8, 9–10, 27–28 aftermath, 68–69 CJEU ruling, 64–67 constitutional questions of integration, 63–64, 67, 115–16 German Constitutional Court’s final decision, 67 German Constitutional Court’s initial decision, 63–64 legal arguments against OMT, 63 proportionality principle, 66 significance, 67–68 see also Outright Monetary Transactions decision; Outright Monetary Transactions programme general concept of banking union, 1–3, 85–86, 117 IGA on transfer and mutualisation of national contributions, 35–36, 40–42, 93 institutional design of banking union, 169–72 democratic legitimacy, 18–20, 173–74 inter-institutional accountability, 174–75 organised irresponsibility, 20 integration, 1–2, 69–71 administration: advantages of centralisation, 99–100, 106–9, 119 material scope, 105–6 personal scope, 104 territorial scope, 104–5 advantages of centralisation, 99–100, 119 advantages of decentralisation, 100–1 banking union, relationship with, 87–88 concept, 86–87, 117 constitutional questions of integration, 63–64, 67, 115–16 differentiated integration, 8, 29–30, 46, 117–18 financial institutions, 31 member states, 30 harmonisation and unification distinguished, 86 integration through governance, 289–91 integration through law, 289–91 measuring integration, 87 SRM, 11, 12–14 see also Single Resolution Board; Single Resolution Mechanism SSM, 11, 14, 117–18 financial institutions, 31 see also Single Supervisory Mechanism unification distinguished, 86 internal market and banking union compared, 268–69, 284 accountability and responsibility, 279–80 Art 114 TFEU, 274, 276–77 banking union compared, 268, 275–76 cooperation procedures: New Approach, 274–75 decision-making, 285–86 ECB compared, 286–87 SSM compared, 286 enforcement of EU law, 279 institution-building and enforcement, 281–82 integration through governance, 289–91 integration through law, 289–91 inward-looking approach, 282 outward-looking banking union compared, 283–84 law-making, 280–81 paradigm change, 287–89 pre-cursor to banking union, 267–68 origins, 270 OMT decision, 270, 272–74 Index  315 SRM Regulation, 41–42 substantive and procedural issues, 276–78 White Paper on Completion of the Internal Market, 271, 272 International Monetary Fund (IMF), 53, 193, 210, 282 irreversibility of Euro, 54, 76, 78–81 joint supervisory committees, 15, 87, 146, 151, 301 judicial oversight, 46 see also Court of Justice of the European Union Lamfalussy process, 87–88, 112, 117, 145 Larosière report, 70–71, 88–89, 95 legal basis: AnaCredit, 241, 261–65 Outright Monetary Transactions, 60–61 Single Resolution Fund, 228–29 SRM, 35–36, 38–40, 176–77, 220 SSM, 35, 36–38, 219–20 legal history of banking union, 69–72 lenders of last resort (LOLR), 80–81, 82 Lisbon Treaty, 41, 79, 166, 237–38 longer-term refinancing operations (LTRO), 50 managerial regulation: rule-based approach compared, 135–39 market exit regimes, 130–31, 132 see also Single Resolution Mechanism member states with derogations, see non-Eurozone member states Meroni doctrine, 8–9, 27, 38, 137, 176 minimum eligible own funds and liabilities requirement (MREL), 178 purpose, 191–92 resolution planning, 191–93 SRB’s role, 192–93 monetary policy and economic policy compared, 1, 8, 27–28 national central banks (NCB), 57, 209–10 credit-risk management, 250–51, 262–63 OMT decision and banking union, 76–77 prudential supervision, 38, 250–51, 303 national competent authorities (NCAs), 30, 32, 40, 43, 134, 177–78 resolution planning, 186–87, 194, 198 significant banks, 297–301, 302, 307 SSM governance, 146–48, 150–53, 156–58, 167, 275–76, 294–97 national enforcement authorities, 18, 276–77, 285–86 national resolution authorities (NRAs), 32, 128, 176–80, 220, 228, 234, 237, 294 national sovereignty, 16, 124, 265–66, 294 neoliberalism: Euro crisis, 15–16 negative integration, 123 non-discrimination principle, 29–30, 45, 183 non-Eurozone member states: administrative procedures, 11, 13–14 Art 25.2 ESCB Statute, 295 Art 131 TFEU, 295 ECB cooperation, 294–301 Eurozone countries compared, 11, 294–95, 305–6 differentiated integration, 8, 29–30 discrimination, 30 post-crisis reforms, 29–44 relationship with, 21, 45–46 SRM, 30, 128–29 SSM, 13–14, 149–50, 293–94 cooperation between Eurozone and non-Eurozone countries, 297–301 decision-making, 149–50 differentiated integration, 30 opting in to banking union, 305–8 Outright Monetary Transactions (OMT) decision: adoption, 53–54, 59–60 background, 49–54 ECB executive board, 55–56 ECB governing council, 54–55, 57–59 legal basis, 60–61 technical features, 61 activation criteria, 62 conditionality, 61–62 see also Outright Monetary Transactions programme Outright Monetary Transactions (OMT) programme, 9–10, 28 accountability, 75–76 banking union, relationship with, 75–78, 81–82, 269–70 objectives of programmes, 73–74 political and constitutional interplay, 74–75 supervision and implementation of monetary policies, 74 technical interplay, 73–74 criticisms, 63 German legal challenge, 63–68 316  Index democratic legitimacy, 75–76 Expanded Asset Purchase Programme compared, 68, 77–78 legal challenge (Gauweiler case): aftermath, 68–69 CJEU ruling, 64–67 ESM challenge compared, 64–65 German Constitutional Court’s final decision, 67 German Constitutional Court’s initial decision, 63–64 legal arguments against OMT, 63 significance, 67–68 pari passu treatment, 64, 66 Securities Market Programme compared, 51–52, 77 ultra vires, 64 Pringle case, 9, 27–28, 40 private law remedies, 103 Prudential Regulation Authority (UK) (PRA), 105 prudential supervision: CRD IV, 127 credit-risk reporting activities, 250–51 CRR, 127 ECB, 240–41 national central banks, 38, 250–51, 303 Prudential Regulation Authority (UK) (PRA), 105 PSPP case, 10 public interest in financial stability, 176, 180–83, 188, 195, 199, 200 Public Sector Purchase Programme (PSPP), 9–10, 69 quantitative easing (QE), 16, 18, 61–62, 77–78, 209 Regulatory Consistency Assessment Programme (RCAP), see Basle III regulatory style of banking union, 132–33, 211 regulatory arbitrage, 127, 130–31, 134, 152–53, 199 negative externalities caused by, 107–8, 119 regulatory technical standards, 127, 288 resolution planning procedures, 184 coordination between diverse institutions, 184, 87 dispute settlement, 184 early intervention measures, 193–94 institutional design, 197–99 MREL, 178, 191–93 resolution plans: recovery plans distinguished, 185–86 SRB’s role in drawing up, 186–87 resolvability assessments, 187–91 see also Single Resolution Board resolution procedures, 225–26, 226, 235 resolvability assessments: aims: public interest in financial stability, 188–89 reducing dependence on public support, 187–88 EBA guidelines, 189–91 SRB’s role, 187–89 banks’ responses, 189 enforcement measures, 189–90 preparation of reports, 189 risk-assessment system (RAS), 146–47 rule-based regulation: managerial approach compared, 135–39 rule-setting at EU level, 119–20 advantages of centralisation, 99–100, 119 advantages of decentralisation, 100–1 CJEU case law, 113 EBA, 112–13 Lamfalussy reforms, 112 Single Rulebook, 112–13 Securities Market Programme (SMP), 50–51 OMT compared, 51–52 short-selling, 10, 40, 157 SIFIs, see Systemically Important Financial Institutions Single Resolution Board (SRB), 2, 4, 10, 14 centralisation, degree of, 179–80, 195 composition, 224, 224–25 crisis management, 183–84 differentiated integration, 14 financial institutions, 31 ECB, interaction with, 179 enforcement of decisions, 178–79 establishment of, 39 governance, 179–80, 195–96 inter-institutional consultations, 196–97 mandate, 175–76, 183 MREL, 191–93 national parliaments, role of, 18, 224–25 oversight of SIFIs, policy aims, 180–83 public interest in financial stability, 180–82 Index  317 resolution decisions, 307 resolution planning procedures, 184–87 resolution plans, 177–78, 186 resolvability assessments, 187–91 responsibilities, 177–78 unique nature, 181–83 see also Single Resolution Mechanism Single Resolution Fund (SRF): establishment, 40 IGA on transfer and mutualisation of national contributions, 40–42 legal basis, 228–29 transferring funds to, 226–28, 227 transitional periods, 227, 227–28 Single Resolution Mechanism (SRM), 4, 92–93, 199–201 adoption, 221 appointment procedures, 234–35 capital distribution, 212–13 decision-making process, 235–36 differentiated integration, 14, 117–18 financial institutions, 31 establishment, 38–39, 72, 89, 222–23, 233 Eurozone and non-Eurozone countries, differences between, 30, 128–29 interplay with SSM, 14–15 legal basis: Art 114 TFEU, 35–36, 38–40, 176–77 BRRD, 220 SRM Regulation, 220 national parliaments, role of, 18, 19, 222–23 policies, 234 Regulation, 40, 180, 220, 235 repartition of responsibilities, 177 resolution procedure: Art 18 SRM Regulation, 235 safeguard clause, 30 ‘significance’ test, 177 SSM compared, 176–78 structure, 176 supranationalist nature, 236–37 timing of supervisory action, 182–83 see also Single Resolution Board Single Rulebook, 14, 71, 89–93, 98, 118, 121 application, 71–72 Arts 53(1) and 114 TFEU, 36 binding technical standards, 71 ECB influence, harmonisation, of substantive law, 126–27 SSM’s role, 71–72, 175 Single Supervisory Board (SSB), 17, 86–87, 176–77, 275, 278 Single Supervisory Mechanism (SSM), 3, 91–92, 127–28 administrative centralisation: Eurozone and non-Eurozone distinguished, 13–14 adoption, 221 appointment procedures, 231 cooperation between Eurozone and non-Eurozone countries, 297–301 decision-making, 231–32 accountability regime, 155 centralisation of, 141–45, 167 challenges, 153–54 EBA and banking governance, 156–59 exclusion of non-Euro countries, 149–50 lessons learnt from regulatory perspective, 150 lessons learnt from supervisory perspective, 150–51 lessons learnt, 150–56 SSM governance, 145–50 Treaty-based independence guarantee, 148–49 differentiated integration, 12–14, 117–18 Eurozone and non-Eurozone countries, 30 financial institutions, 31 enforcement powers: competition law compared, 133–34 establishment, 36, 89, 221–22 federalism, 210–11 interplay with SRM, 14–15 legal basis: Art 127(6) TFEU, 35, 36–38, 219–20 national competent authorities and ECB cooperation, 296–97 policies, 230–31 reforms, 146–47 direct supervisory and enforcement powers, 147 decision-making functions, 147–48 Regulation, application of national law, 33–34, 46–47 Art 19, 96–97 ECB and EBA, relationship between, 35 SRB, establishment of, 39 significant and non-significant banks, 32, 301–5, 302 Single Rulebook, role in, 71–72 SRM compared, 176–78 supranationalist nature, 232–33 Six Pack, 8, 31 318  Index small and medium-sized enterprises (SMEs), 93, 116–17, 120, 181, 243 SRB, see Single Resolution Board SSM, see Single Supervisory Mechanism standardisation, 21, 274–76 structure of banking union, 126 EDIS, 129 harmonisation of substantive law, 126–27 Single Rulebook, 126–27 SRM, 128–29 SSM, 127–28 subsidiarity, 2, 39, 43–44, 100, 102–3, 115 supervision, see banking supervision supervisory failure: negative externalities caused by, 106–7 Supervisory Review and Evaluation Process (SREP), 144, 146, 150–56 supranationalism, 17–18, 57–58, 78, 82, 122, 174–75, 177–78, 180, 197–99, 226–29, 237–38 SRM, 237 SSM, 232–33 Sutherland report, 270 Systemically Important Financial Institutions (SIFIs), 2, 8, 20–21 three/four pillars of banking union, 3–4, 90 European Deposit Insurance Scheme, see European Deposit Insurance Scheme Single Resolution Mechanism, see Single Resolution Mechanism Single Rulebook, see Single Rulebook Single Supervisory Mechanism, see Single Supervisory Mechanism Treaty on European Union (TEU): Art 3(3), 121–22, 123, 125 Art 4(2), 16 Art 31(2), 37 Protocol 27, 121–22, 123 social market economy, 122 Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG), 27 Treaty on the Functioning of the European Union (TFEU): Art 114, 10, 14, 86, 279 agency powers, 39–40, 183 ESAs, 146 harmonisation, 86, 124, 146, 274, 276 Single Rulebook, 36 SRM, 35–36, 38–40, 45, 176, 212–13, 221, 228 Art 119, 125 compatibility of OMT with ECB mandate, 63–64 Art 123, 53 compatibility of OMT with ECB mandate, 63–64, 66 Art 125, 27, 53, 125 Arts 127(1) and 127(2) compatibility of OMT with ECB mandate, 63–64 Art 127(6), 10, 14, 211, 241, 279 SSM, 35, 36–38, 127, 176, 219–20, 221, 277 Art 340, 279–80 competences, 18–19 Two Pack, 31 ... supervision in the hands of the ECB, and the economic and fiscal policy in 11 ie the withdrawal of the UK from the European Union 6  Stefan Grundmann and Hans-W Micklitz the hands of the SRB (see... European Banking Union and Constitution – The Overall Challenge STEFAN GRUNDMANN AND HANS-W MICKLITZ I.  The Challenge A.  Three Puzzles Regarding the ? ?European Banking Union? ?? The European Banking Union. .. the constitutional foundations of banking union Then in parts and 3, it looks at the implications of banking union for European integration and for democracy Finally it asks whether banking union