The European Banking Union and Western Balkan Countries ? Kosovo

AuthorShkëlqesa Çitaku
PositionUniversity of Pristina 'Hasan Pristina', Kosovo
European Journal of Economics, Law and Social Sciences
IIPCCL Publishing, Graz-Austria
Vol. 1 No. 1
January 2017
ISSN 2519-1284
Acces online at
The European Banking Union and Western Balkan Co untries – Kosovo
PhD (C.) Shkëlqesa Çitaku
University of Pristina “Hasan Pristina”, Kosovo
All Countries in Western Balkans aspire membership in the European Union, but they face
di erent challenges in terms of lack of the appropriate factors as vital requirements for
catching up with the rest of the European Union. Financial stability, diverse economies, tax
regimes, macroeconomic stability, are common e orts throughout the region.
The long-term challenge remains the risks posed by nancial instability, although the
governments in the region remain commi ed to reforms. Meanwhile, banks in the Western
Balkan Countries continue with a moderate level of non-performing loans rather than lending
to the real economy, as another risk from nancial sector fragility. However, the importance
of the international strong support has helped to prevent bank failures, especially in late 2008
when several countries were faced with signi cant deposit out ows of their banking systems.
The Banking Union as an integrated nancial framework is based on the three basic pillars:
Single Supervisory Mechanism, Single Resolution Mechanism and Common Deposit
Guarantee Scheme. The European Banking Union transferred important powers from the
Member States to the EU and had signi cant implications for the internal market. Since in the
EU, there are two groups of countries (participants in the Banking Union and non-participants
EU Member States) there is a need for strong harmonization and well-functioning of-European
Supervisory Authorities.
From the perspective of Western Balkan Countries, the positive development on cross-border
coordination was the signing in October 2015 of a memorandum of understanding between the
European Banking Authority (EBA) and the supervisory authorities of the banking systems
in ve of the six Western Balkans countries (excluding Kosovo). This non-binding agreement
established a framework of cooperation and information exchange to strengthen banking
regulation and supervision of banks operating in the EU and in the region. The Western
Balkans countries have commi ed to provide the EBA with regular updates on developments
in their banking systems and to bring their own regulatory and supervisory standards and
institutional arrangements in line with those in the EU.
Keywords: Banking Union, nancial stabilization, Western Balkan Countries, Kosovo.
The European Banking Union goes a step further since it adds new components
such as the Single Supervision Mechanism conducting by European Central Bank
(ECB) and the Single Resolution Mechanism to the European legislation. They
are complemented with the Single Rulebook, which aims to provide a single set
of harmonized prudential rules that must be respected by all Member States and
all credit institutions within the EU. The Banking Union introduces a centralized
governance framework and centralization of the powers of the supervision of the
nancial market. Moreover, the establishment of the European Banking Union with
single oversight and resolution of banks in the Eurozone Member States created the

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