The Proposals for a Single Supervisory Mechanism for Banks in the Euro Area are an Important Step in Strengthening the Economic and Monetary Union
Posted: 29 Jan 2013
Date Written: January 12, 2013
The Single Supervisory Mechanism (SSM) is considered by many to be fundamental for the creation of the European Union banking union. The very idea behind the banking union is not only to strengthen the confidence in the banks of the Member States that are using the euro as their national currency, but also to set up a solid framework for effective oversight of the EU financial regulation. At the time, when the financial crisis affected Europe in 2008, there were twenty-seven diverging financial regulatory systems in operation that were dependent on national legislation. The SSM was strongly needed, because otherwise these different operational regimes would have fragmented the EU internal market, thus exacerbating the financial turmoil. Therefore, a plan for setting up of a banking union has been gradually being discussed over the past couple of years, in particular on the Euro Area Summit by the European Council (June 2012), and in official proposals formulated by the European Commission (September 2012). As of 1 January 2013, new legislation on the matter has entered into force.
Keywords: Single supervisory mechanism, EU banking union, ECB, EMU
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