August 10, 2026

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August 10, 2026

Newsletter

The European Post

Policy • Diplomacy • Strategic Insight

LATEST
Europe Finally Locks In Its 348-Satellite Answer to StarlinkPlatform Work Rules Face a National Scramble Before DecemberDuty-Free Parcels Reach the End of the Line for EU ShoppersAfter Nine Years, Europe and Australia Seal a Trade PactBeijing Answers Europe’s Russia Sanctions in KindOne Year On, the EU-Japan Alliance Faces Its First TestEurope’s Chip Ambitions Still Run Through Taiwan’s FabsWhy South Korea Bet Its Research Future on Europe’s ProgrammeEurope and Japan Deepen Their Economic Alliance as Rivals CircleFive Joint Defence Projects Launch Europe’s Military ShieldElectrification Plan Aims to Make Europe First Electro ContinentHorizon Europe Budget Fight Heats Up as Ministers Push BackGoogle’s DMA Fine Sets Off a Transatlantic Tariff ClashTwenty New University Alliances Join Erasmus for Two YearsForeign Subsidies Case Puts Temu in the EU’s SightsVan Tachographs Now Mandatory for Cross-Border FleetsStress Test Exposes Gaps in Euro Area Bank DefencesEurope Bets on a Gulf Partnership Before the Riyadh SummitWhy the Atlantic Route Now Runs Through MauritaniaKyiv and Chisinau Advance as the EU Accession Talks Gather PaceEurope Finally Locks In Its 348-Satellite Answer to StarlinkPlatform Work Rules Face a National Scramble Before DecemberDuty-Free Parcels Reach the End of the Line for EU ShoppersAfter Nine Years, Europe and Australia Seal a Trade PactBeijing Answers Europe’s Russia Sanctions in KindOne Year On, the EU-Japan Alliance Faces Its First TestEurope’s Chip Ambitions Still Run Through Taiwan’s FabsWhy South Korea Bet Its Research Future on Europe’s ProgrammeEurope and Japan Deepen Their Economic Alliance as Rivals CircleFive Joint Defence Projects Launch Europe’s Military ShieldElectrification Plan Aims to Make Europe First Electro ContinentHorizon Europe Budget Fight Heats Up as Ministers Push BackGoogle’s DMA Fine Sets Off a Transatlantic Tariff ClashTwenty New University Alliances Join Erasmus for Two YearsForeign Subsidies Case Puts Temu in the EU’s SightsVan Tachographs Now Mandatory for Cross-Border FleetsStress Test Exposes Gaps in Euro Area Bank DefencesEurope Bets on a Gulf Partnership Before the Riyadh SummitWhy the Atlantic Route Now Runs Through MauritaniaKyiv and Chisinau Advance as the EU Accession Talks Gather Pace

New Bank Rescue Rules Take Effect Across The Banking Union

Baltasar Haraldsson
Legislative Monitor, Financial Services and Banking

Lisbon: In a city that learned the hard way what happens when a mid-sized bank fails without a clear rulebook, the European Union has finally closed one of the longest-running gaps in its financial defences. The reform of the Crisis Management and Deposit Insurance framework, known in the jargon as CMDI, has been published in the Official Journal, completing a legislative journey that began years ago and giving the bloc a sturdier set of tools for handling banks that are too small for the headlines but too important to abandon.

The problem the reform addresses is specific. When the EU built its Single Resolution Mechanism a decade ago, it designed the machinery chiefly for large, cross-border institutions whose collapse could threaten the whole system. Smaller and medium-sized banks fell into an awkward middle ground: too modest to justify the full resolution apparatus, yet capable of inflicting real damage on a local economy if they were simply wound up under national insolvency law. The result, in case after case, was improvisation.

The revised framework widens the resolution toolkit so that authorities can manage those mid-tier failures in a more orderly way, with clearer access to industry-funded safety nets and a stronger emphasis on protecting depositors. The Single Resolution Board, which welcomed the publication, has described it as a refinement built on lessons from the mechanism’s first ten years rather than a wholesale redesign. On 12 June the Board convened a technical meeting to walk banks through fresh operational guidance, a sign that the focus is shifting from legislating to implementing.

Yet the reform also throws the unfinished business into sharper relief. The Banking Union still rests on two legs rather than three. A common European Deposit Insurance Scheme, meant to guarantee savers identically wherever they bank, remains stalled by the reluctance of member states to pool the risk. A shared public liquidity backstop for banks in resolution is likewise absent. Until both exist, a depositor’s ultimate protection still depends in part on the strength of their national government, precisely the link the Banking Union was created to sever.

For now, the CMDI reform represents real progress, hard-won and overdue. It will not, on its own, complete the Banking Union, and officials are careful not to oversell it. But it removes one of the more glaring weaknesses in the system and gives supervisors a credible answer to a question that has dogged them since the last crisis: what, exactly, do we do when a bank that is neither systemic nor negligible begins to fail?

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