When the global financial crisis hit the EUs financial system, it exposed various weaknesses in the regulatory and supervisory architecture of financial market supervision and the need to revise the existing decentralized supervisory framework arose. In history considerable efforts towards harmonizing bank supervisory practices across the EU had been made. However, the creation of the European banking union has been the biggest milestone since now. The single supervisory mechanism, one of the three pillars of European banking union, empowers the European Central Bank to take over the supervision of all banks in the eurozone. The focus in this master thesis is on the transformation of the European supervisory structure towards a centralized supervision of banks in the Euro area. Therefor economic theories of neoclassical economics, keynesianism and political economy will be applied in order to explain these changes.