A banking union is an inevitable part of creating the euro area but for Croatia it is probably best to wait, for the time being, until that process is completed, Croatian National Bank (HNB) Governor Boris Vujcic said during a conference, "Banking Union: State of Play and Challenges Ahead."

"The HNB's attitude is that the Banking Union needs to be completed however at the moment the best option for Croatia is to wait until all three pillars are completed: joint monitoring (Single Supervisory Mechanism (SSM), a joint bank bailout fund, and a joint deposit guarantee  (a deposit insurance scheme). When that is completed, only then would it be in Croatia's national interest to enter the Banking Union," Vujcic said.

The Banking Union was launched by the European Commission, after the outbreak of the global financial crisis, through a series of initiatives with the aim of reducing risks to financial stability and mutual risk security between member states. The aim is to strengthen the eurozone's institutional framework and bank resilience to crises, not just in the euro zone but throughout the European Union.

With the establishment of a Banking Union there would be no need to use tax payers' money to bail out bad banks.

Vujcic also added that it was essential that Croatia introduces the euro currency as soon as it meets the necessary criteria and that that will bring more benefits than costs.

"It is important that we realise that reforms must be implemented and that they have to be above any political interests," Vujcic concluded.

Head of the European Commission Representation in the Republic of Croatia Branko Baricevic underscored that it was necessary to develop concrete mechanisms for stronger harmonisation of EU economic policies and to prepare the following steps for better economic management in the euro area.

"The five pillars that are the basis of the economic and monetary union of EU member states are an economic union, financial or banking union, fiscal union, strengthening democratic responsibility, the legitimacy and institution as well as the social dimension of the European monetary and economic union as part of an equitable EU," Baricevic underscored.

Chief Economic Analyst in the European Commission Phlipp Rother spoke about three unique rules of the banking union.

The Single Supervisory Mechanism (SSM), that is a single monitoring mechanism means that the European Central Bank is the main monitoring body for about 150 of the largest and most significant banking groups while other banks in member states that participate in the monitoring mechanism are monitored by national monitoring bodies.

Single Resolution Mechanism (SRM), furthermore consists of a single rehabilitation fund and relates to all banks in the Banking Union so that all banks in the union pay contributions to that fund.

The European system of deposit security relates to additional deposit guarantees for citizens for up to 100,000 euro per bank account, which, according to Rother, would lead to stronger security for all depositors in the Banking Union.

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