Explaining National Preferences on the New European Banking Policy Framework: The Case of Lithuania

This paper tries to explain national preference formation on the key initial elements of the European Banking Union project as well as whether and when to join it. Building on the Lithuanian case, it analyses to what extent the country’s national position was influenced by four key factors. First, foreign ownership of the national banking sector that is dominated by non-euro area Nordic bank subsidiaries. Second, the recent resolution experience of two banks in 2011–2013. Third, the Presidency of the Council of the EU during which Lithuania brokered the political agreement on the Single Resolution Mechanism. And, fourth, euro area membership that was unclear until spring 2014.