 Regulation of the banking industry has been top of the global agenda for the past five years. But why is it so important? When Lehman Brothers collapsed in 2008, most Europeans thought the problem was a distant one. But they underestimated the interconnectedness of banks in today's globalized world. It wasn't long before the problem arrived at Europe's doorstep. In the ensuing crisis, it became clear that Europe's financial framework was built on shaky foundations. Europe had built a currency zone, but without the appropriate institutional architecture needed to react quickly to a crisis. Because of the interconnectedness of banks in Europe's single market, a failing bank in one country threatened to infect banks in others. And because bank debt was heavily linked to government debt, what began as a banking crisis soon became an economic crisis. As one eurozone economy after another began to crumble, some thought that monetary union was on the verge of collapse. Various solutions were proposed, but it was clear that Europe was simply clustering over the cracks. More drastic measures were needed. In July 2012, eurozone leaders promised to do whatever it took to save the euro. And in November of that year, the European Commission published a blueprint for a genuine economic and monetary union. One part of that blueprint was the banking union. Designed to finally break the link between countries and their banks. The first pillar of the banking union was a single rulebook for European banks. Designed to harmonize banking regulation across the European Union. The second pillar was the single supervisory mechanism. To supervise banks in the eurozone and spot problems before they got too big to solve. The third pillar was a single resolution mechanism. To close down troubled banks in an orderly fashion. And to minimize the cost to the taxpayer. The fourth pillar was a common deposit guarantee scheme. To protect savers and ensure that depositors are treated equally in all EU countries. Under the leadership of the Irish presidency in the first half of 2013, Europe reached agreement on the legislation governing the single rulebook. And made great strides in completing the single supervisory mechanism. But the other pillars of the banking union have been more controversial. Some say that a common deposit guarantee scheme cannot exist under the current treaties. And the new proposal for a single resolution mechanism has met with great resistance from Germany. Which believes that it too requires treaty change. But changing the treaties could take years and leave the EU vulnerable to further crises in the meantime. Failure to agree on the SORM could create enormous uncertainty in the markets. The negotiations in the coming months will be crucial in determining whether Europe fails a steel-framed banking union or a timber-framed one.