In June 2012, the European Council and euro area summit agreed to deepen Economic and Monetary Union (EMU) by creating ‘Banking Union’ (BU), which was to be based on five components: a single rulebook on bank capital and liquidity; a common deposit guarantee scheme; a single framework for banking supervision; a single framework for the managed resolution of banks; and a common backstop for temporary financial support. BU will bring about a significant transfer of powers from the national to the European Union (EU) (to be precise, the BU) level. Hence, it represents a major development in European economic governance and European integration history more generally. This joint project by Professor David Howarth (University of Luxembourg) and Professor Lucia Quaglia (University of York) investigates the political economy of BU. It sets out to explain the timing and design of BU, as well as its implications for the member states that will join it and those that will not do so. Theoretically, the research develops the concept of the ‚inconsistent quartet’ in the EU, composed of four elements, namely financial stability, financial integration, national financial policies, and the single currency. It is argued that not all the four elements can be achieved at once, and that different countries face different trade offs and hence have different preferences with reference to the various elements of the quartet. BU implies the surrender of national financial policies. Methodologically, the research project engages in a comparative political economy analysis of national positions on BU by examining the configuration of the main national banking systems in the EU. Key features of national banking systems considered are the degree of concentration and internationalisation and the relative reliance of nonfinancial companies on bank credit (and thus the relationship between the banking system and the real economy). The project then investigates how the configurations of banking system in different countries affect the preferences of national policy-makers on BU.Professors David Howarth and Lucia Quaglia have – combined – an unparalleled expertise in the diverse areas covered by BU, including EMU, the European Central Bank, national banking systems and financial regulation at the national, European and international levels. Oxford University Press has expressed a strong interest for the research on BU and Howarth and Quaglia submitted a book proposal to OUP in January 2014. The applicants will organise an academic workshop followed by a public event at the University of Luxembourg to discuss the topic, which is likely to stimuate public and media attention. Finally, the mobility grant will enable Howarth and Quaglia to submit a grant proposal for a large collaborative project, based on a comparative analysis of national financial systems in the EU.