The report first describes the recent general developments in financial markets and the financial sector. This is followed by a more in-depth analysis of two particular policy areas that impact European financial stability and integration. In this edition, the first focus chapter reviews the current achievements of the Banking Union and the progress towards its completion. The second focus chapter discusses the EU macro-prudential policy framework. The Banking Union and macro-prudential policy have gone a long way in providing authorities with the tools to reinforce financial stability in the EU. They will remain important policy areas in view of the need to improve risk sharing and reduce risk as part of the long-term vision to deepen the Economic and Monetary Union. These policies are further developed and implemented in a period in which the European economy has continued to recover, despite remaining economic and political uncertainties. […]