The harmonization of banking legislation in the EU

Author:Shkëlqesa Çitaku
Position:University of Pristina 'Hasan Prishtina', Republic of Kosovo
ISSN 2410-3918
Acces online at IIPCCL Publishing, Tirana-Albania
Academic Journal of Business, Administration, Law and Social Sciences Vol. 2 No. 1
March 2016
The harmonization of banking legislation in the EU
Shkëlqesa Çitaku
University of Pristina “Hasan Prishtina”, Republic of Kosovo
This paper attempts to assess the current legislation of banking in the European Union. The
process of unification in Europe is also followed by efforts to harmonize and unify the laws of
the member states. In the field of banking industry the precondition for harmonization of
laws is the integration of internal market with the free movement of capital. The regulation
and supervision of banks in EU still remains fragmented. European member states still have
diverse regulations concerning the role of the state. The European Commission has the
important function of proposing EU legislation on financial services including banks and
ensuring that EU law is properly applied throughout the EU.
Banks are considered as a key industry enabling all the economic activities via depositing,
crediting and arranging of payments. A number of secondary legislation has been adopted by
the EU institutions to harmonize the national banking law of Member States.
The principles and objectives set by the European Commission Treaty depend on four EU
freedoms with the aim of effective and open market including banks. Therefore it was a
continuous process of harmonization of national banking regulation via secondary law since
the 70’s.
Keywords: Banks legislation, internal market, Banking Union.
The EU legislative activity in the area of banking regulation has traditionally been in
the form of EU directives. The EU directives do not have legal effect in Member
States of the EU until implemented by provisions of their national law. The introduction
of a “Single Rule Book” for financial services as a result of the commitment of the
European Commission, is increasingly taking the form of direct applicable EU
regulations. From 2014, the banking Union consists of the Single Supervisory
Mechanism and Single Resolution Mechanism, which are based upon the EU’s “single
rulebook”.1 The provisions of the single rulebook are set out in three main legislative
· Capital Requirements Regulation and Directive (also known as CRD IV;
2013) which implements the Basel III capital requirements for banks;
· Deposit Guarantee Scheme Directive (DGSD; Directive 2014/49/EU of 16 April
2014) which regulates deposit insurance in case of a bank’s inability to pay its
· Bank Recovery and Resolution Directive (BRRD; Directive 2014/59/EU of 15 May
2014) which establishes a framework for the recovery and resolution of credit
institutions and investment firms found to be in danger of failing.
1 “The EU Single Market – Banking union”. European Commission.

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