The article presents the key principles of the functioning of credit and financial institutions in the European Union. The analysis is based on the legal definitions of both institutions as included in Directive 2000/12/EC relating to the take-up and pursuit of business of credit institutions, which establishes an EU-legal framework for the internal national legislation of Member States concerning this issue.

Particular attention has been paid to fact that such institutions are entrepreneurs on the EU single market and have clearly defined company profiles which determine the range of their activities.

An important element of the EU financial market inheres in the existence of common harmonised and standardised ways of dealing between the institutions active on this market. The procedure of obtaining a licence necessary to set up a credit institution is associated with one of the main principles of the European financial market, namely with the single licence principle. The main idea underlying this principle is that once an entity has obtained a licence in one of the member states it can conduct its business anywhere in the European Union. The single licence principle links to the mutual recognition principle. As laid down in the above Directive, the single licence principle allows credit institutions which have obtained such a licence and which respect supervision measures applied by the supervisory body issuing the licence to conduct business in any EU member state.

The article is wound up with the conclusion that the functioning of the entities active on the EU financial market is relatively stable since it is not subject to any frequent or radical modifications. It can be described as being relatively predictable, and this feature may be of particular significance for Polish entities which will become a part of this market with the accession. Its most crucial advantage is the Member States existing side by side with the common standardised legal framework which should be recognised in the legislation of all Member States.