The European Banking Union is created as response to the global financial crisis, or as an attempt to restore confidence in the European banking system that was damaged by the financial crisis that began in the US and which passed on the European banking system. In fact, the banking union is the integration of the financial system which seeks to implement more effective supervision and regulation of European financial institutions, as well as the bank recovery of which costs will not have affect on tax obligators in the country. The banking union is a system of supervision and bank recovery in EU which operates on the basis of single rules applied through the banking sector and ensures the common implementation of these rules in the European area. It is based on single rules and three structural pillars: a single supervisory mechanism, a single resolution mechanism and a european deposit insurance system. The goal of the banking union is to make banking system firm and more resilient to crises, and when it comes, it will be managed in order to moderate the possible consequences of the crisis. The concept of a banking union is to separate the bond between states and banks in order to prevent taxpayers from bearing the cost of failed banks, and leave costs of bank recovery to shareholders and bank owners. The aim of this paper is to analyze the establishment of the banking union and to demonstrate its role in the European banking system and its effects on the real economy and the overall banking system of the European Union.