The Banking Union provides the stability of the banking and the financial system of the EU member states that are part of the euro area or decide to join it. The stability of the banking sector is important for the stability of the financial system of the Republic of Croatia, because the banking system represents almost 70% of the financial system, while about 80% of the Croatian banking sector assets are owned by foreign banks that are part of the Banking Union. Participation in the Single Supervisory Mechanism would bring greater stability to the Croatian banking system through early identification of critical situations, their timely resolution, and better crisis control. The Single Resolution Mechanism of the Banking Union will ensure the stability of the Croatian banking system by ensuring the trust of clients and preventing a bank run if a bank's survival is threatened, and the bank's rehabilitation will not be at the expense of the taxpayers and the state budget. The establishment of the third pillar of the Banking Union, the European Deposit Insurance Scheme (EDIS), would avoid the use of funds from the Croatian budget for the problems of Croatian banks and the payment of depositors if funds from the deposit insurance fund at the State agency for deposit insurance and bank resolution were to be spent. The capitalization and liquidity of Croatian banks is in excess of requirements, and the European Central Bank may set higher capital requirements if it assesses that there are additional risks. The Croatian National Bank will receive macroprudential policy instruments that can limit credit growth and limit demand for loans or oblige banks to finance themselves from domestic sources. Croatia and the Croatian banking system are exposed to potential crises that manifest as currency disturbances, and the introduction of the euro will reduce the risk of a banking crisis, and the risk of a currency crisis will disappear completely. The accession to the Banking Union will ensure the stability of the banking and financial system of the Republic of Croatia.