Ring-fencing in the Eurozone and the road to the Banking Union. Bertelsmann Stiftung Policy Paper 18 February 2020

The Banking Union is one of the most important and ambitious projects launched by the European Union in the last ten years. With supervisory and resolution mechanisms for Eurozone banks now up and running, the current narrative is that most of the work to create the Banking Union is complete. This paper disputes this view, arguing that the persistence of financial protectionism – or “ring-fencing” – at Member State level significantly erodes the effectiveness of the Eurozone’s single supervisory and resolution mechanisms. It formulates concrete recommendations and calls for a political leap of faith from Eurozone Member States to cease ring-fencing practices