Once these proposals are implemented, the banking union will be complete.

A European banking union with joint liability cannot be put off much longer.

Monetary union without banking union will not work, and a workable banking union requires at least some elements of fiscal and political union.

Ever closer union means an EU that moves ineluctably from economic and monetary union to banking union, then to fiscal union, and finally to political union.

The motivations of those who advocate a banking union differ markedly.

But Europe s policymakers claim to be making progress toward a so called banking union, which means collective banking supervision, rather than a merger of banks themselves.

Banking union, Europe s leaders agreed, means creating a single supervisory authority.

The end 2013 deadline for implementation of the banking union is a long way off.

If the idea of a European banking union is serious, now is the moment to advance it.

Otherwise, the coming banking union and fiscal transfers will lack the necessary political legitimacy.

But the European Banking Federation has dug in its heels, describing the recommendations as completely unnecessary.

But, whatever the merits of a banking union and there are many proposals to establish one raise more questions than can currently be answered.

Of course, the Germans have reluctantly come to accept the necessity of a banking union that includes common deposit insurance.

How many more will be in intensive care before a banking union becomes a reality?

But the existential challenge political agreement on the key elements of banking and fiscal union is only just beginning.

Hollande, backed by Spain and Italy, accomplished a small step in that direction at June s European Union summit, which finally endorsed the idea of a banking union.

The new banking union can then be extended to include a common resolution fund to enable the orderly dissolution of insolvent institutions.

A proposed banking union would help to separate the commercial banks creditworthiness from that of their government.

The final question is what such a eurozone banking union would mean for the single financial market, and especially for EU countries that are outside the single currency.

Now the euro crisis is forcing EU leaders to address institutional changes namely the creation of banking, fiscal, and political union that they have long deferred.

By effectively defaulting on a deposit insurance guarantee through its actions in Cyprus, the eurozone backtracked on the planned banking union.

In the process, some form of fiscal and banking union may also emerge, together with some progress on political integration.

But Europe s banking union also requires uniform rules for winding up insolvent financial institutions and this has become a sticking point.

So the likely outcome is that, in the EU s time honored fashion, the banking union will be constructed using existing powers, finessing the sovereignty question, and avoiding any reference to public opinion.

The emerging banking union is not only the first step toward a European fiscal union it is also the final step toward completing the European common market.

The European Central Bank has been more thoughtful, though no less enthusiastic, arguing that a banking union should have three objectives.

Banking union is a positive development, but there is no agreement on additional reforms, such as the creation of a common fiscal capacity or a common treasury.

It would also be responsible for overseeing the banking union, and it would represent the eurozone in all international financial institutions and informal groupings.

A banking union is an important start, which should prevent financial markets from fragmenting along national lines and reduce private sector borrowing costs.

This heightened uncertainty could spill over to economic activity in the rest of the European Union through adverse feedback loops between sovereign risk and the banking system.

First, the banking system.

Lemon Banking

Reforming Bank Reform

4320 Bank authorization

In 2013, we will have to turn our gaze to other countries (such as Cyprus and Spain), and ensure that we maintain the momentum needed to build a banking union.

But Europe s policymakers claim to be making progress toward a so called banking union, which means collective banking supervision, rather than a merger of banks themselves. In September, the European Commission announced a plan to make the European Central Bank the supervisor of all 6,000 of Europe s banks.

The banking system would not survive this without help, so the EU s bailout activities should be refocused accordingly.

A normal monetary union, which is what the eurozone aspires to be, requires a normal central bank to carry out the entire range of central banking functions.

Celebrity Central Bankers

Europe s Bogus Banking Union

Borlaug and the Bankers

Europe s Flawed Banking Union

In the case of the banking union, they plan to use Article 127(6) of the Lisbon Treaty which allows the European Council to grant authority to the ECB to perform specific tasks concerning policies relating to the prudential supervision of certain financial institutions in the Union.

Fadil changed his bank account details.

But banking is also mystifying.