“Whatever It Takes” and the Banking Union

Abstract

In June 2012, we entered the final turning point of the crisis, even though we couldn’t realize it yet then. In the Eurozone Summit in Brussels on 28–29 June 2012, the euro area leaders decided on building a banking union, which should dismantle the toxic link between banks and sovereign debt. As the heavy turbulence in the markets continued, the member states—and market forces—began to look to the ECB for help. During the London Olympic Games in July 2012, Mario Draghi gave speech in which he pledged the ECB’s willingness to do “whatever it takes” for the euro to survive. “Believe me, it will be enough”, he stated—and the markets took him by his words.