If all the conditions for resolution are met, the Board will adopt a resolution scheme for the institution or group in question, which is thereafter transmitted to the Commission. This may be fairly straight-forward if the scheme is based on agreed and adequate ex-ante resolution planning for the institution or group in question, and preparations for resolution had been taken prior to the triggering point. The Commission can approve the resolution scheme from the Board in two ways: approving it upfront or raising no objections within 24 hours. After this, the resolution scheme is adopted and can be implemented by the national resolution authorities as instructed by the Board. It is an important feature of the final text that the European Council only becomes involved in the decision-making at the explicit request of the Commission.11  9  The plenary session will take decisions by simple majority when it discusses issues of a general nature, such as the annual work programme, the budget, or the rules of procedure. Each member will have one vote, and in case of a tie the Chair will have the casting vote. The executive session will prepare all decisions concerning resolution procedure and adopt those decisions. When deliberating on the resolution of a bank or group, the executive session will also involve the members of the directly concerned Member States in the decisionmaking process. Each member, including the Chair, will have one vote. In neither session will the observers have a vote.

It was only later that the concept of a fully-fledged Banking Union emerged, which would contain a SRM and a possible Deposit Guarantee Scheme, which has meanwhile been postponed. Rationale and objectives of Monetary Union The absence of European supervision and resolution had however already been identified by many analysts as an initial design flaw of monetary union. As the crisis developed, this became clear. The high degree of interconnectedness, in the euro area in particular, implies that the impact of supervision affects not only the domestic banking sector but also, as an externality, other countries. This has been captured by the so-called “financial trilemma”. The concept of the trilemma illustrates the impossibility of achieving simultaneously three objectives in an environment with linked financial markets. These objectives are financial stability and financial integration while preserving supervision at national level.1 The reasoning behind this is the following: with increasing financial integration, pursuing national financial policies will generally not lead to financial stability, because national policies seek to benefit national welfare, while not taking into account externalities of national supervisory practices in other countries.2 This leads to an under-provision of financial stability as a public good.3 A correction of this flaw addresses the first objective of Banking Union. A second objective for Banking Union4 stems from the evidence that keeping supervision at national level in both creditor and debtor countries contributed to the large imbalances that  1  Schoenmaker, D. (2011): “The Financial Trilemma”, forthcoming in Economics Letters.