The European Union needs to implement a common fiscal backstop and a deposit insurance scheme to build a true banking union, or it will be more vulnerable to shocks, the chief economist of the European Central Bank said.

EU banks, and especially their balance sheet exposures, sometimes seemed to be "more like a collection of national banking systems than a single entity", Peter Praet told an audience in Vienna on November 24. This meant that "country-specific shocks cannot be absorbed via