The European Banking Union and Western Balkan Countries ? Kosovo

• Author: Shkëlqesa Çitaku
• Position: University of Pristina 'Hasan Pristina', Kosovo
• Pages: 225-229

European Journal of Economics, Law and Social Sciences

IIPCCL Publishing, Graz-Austria

Vol. 1 No. 1

January 2017

ISSN 2519-1284

Acces online at www.iipccl.org

225

The European Banking Union and Western Balkan Co untries – Kosovo

PhD (C.) Shkëlqesa Çitaku

University of Pristina “Hasan Pristina”, Kosovo

Abstract

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 fi 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 fi 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 signifi cant deposit outfl ows of their banking systems.

The Banking Union as an integrated fi 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 signifi 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 fi 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, fi nancial stabilization, Western Balkan Countries, Kosovo.

Introduction

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

fi nancial market. Moreover, the establishment of the European Banking Union with

single oversight and resolution of banks in the Eurozone Member States created the