Why has Europe found it so difficult to deal with the so-called “euro crisis”. The talk focuses on the complexity created by having a multiplicity of different types of sovereign-debt crises and banking crises at the same time; it also highlights the failure of available governance mechanisms and the lack of workable political discourse at national and supranational levels. Whereas the origins of the crisis can be found in the weakening of various governance mechanisms through the introduction of the European Monetary Union, the crisis itself has contributed to a further weakening of governance by making the ECB a hostage to the weakness of banking systems. The second half of the talk focuses on the role of banking union in the reform of European governance and on the fundamental political issues in the discussion about banking union.