The creation of a new union for Europe's banks has already been subject to more negotiations than a billionaire's pre-nup agreement, but the work is far from over, the former head of the European Central Bank says.
The leaders of the European Union's reached a long-awaited agreement this week on a mechanism to manage the closure of the region's failing banks. The so-called single resolution mechanism, together with bolstering of the ECB's supervisory powers and region-wide deposit insurance, makes up the European "banking union" – a deal that should drastically reduce the need for tax-payer funded rescues of banks.
"The concept is to decouple the bank from the state," Jean-Claude Trichet, who was President of the European Central Bank for much of the region's debt crisis, told CNBC.
"I expect this goal will be obtained, but it is a work in progress."
A 55 billion euros bailout fund, one of the most important tenets agreed on this week, will only be ready in 2026, raising the question of what will happen if a bank collapses in the interim.
(Read more: Europe's banking plans: What you need to know)