Strengthening the European Banking Union: Addressing Emerging Risks through Resilient Financial Dtructures

The European Banking Union (EBU) is an essential framework for ensuring financial stability and depositor confidence within the Eurozone. Despite its establishment following the 2008 financial crisis, the EBU exhibits critical vulnerabilities, particularly in light of recent geopolitical tensions and climate-related risks. This article explores the current state of the EBU, identifies key shortcomings such as the absence of a unified European Deposit Insurance Scheme (EDIS), the lack of a centralised fiscal backstop, and fragmented cross-border coordination. It further proposes comprehensive reforms aimed at enhancing the resilience of the Banking Union against emerging risks, including a dual approach to stress testing that incorporates geopolitical scenarios and climate resilience strategies. By reinforcing the EBU's structure and policies, this paper aims to contribute to a more robust financial architecture capable of withstanding future challenges. Keywords: EU, Banking Union, financial stability, deposit insurance, fiscal backstop, stress testing, geopolitical risks, climate resilience, risk management, ESG, sustainability, crisis management