The EU Primary Challenge: New Regulations of the Financial System towards a Banking Union

The recent international financial crisis has shown that financial and banking problems of a country may have an impact worldwide. Governments have been faced the difficult decisions to save several major banks with taxpayers' money or accept their bankruptcy, which would have meant financial loss to millions of customers. Per total, state aid to banks during the crisis amounts to 13% of EU gross domestic product. The European Union has proposed a new framework for crisis management in the banking and financial sector to prevent any new crisis. The European Commission has established a system of coordination of supervisory activities that allow governments and regulators to identify banks in difficulty and act accordingly. Therefore, no bank is "too big" or "too connected" to fail. The reform objectives are to ensure stability and to prevent financing with public money the private banks.