The European Single Supervisory Mechanism
31 Pages Posted: 26 Feb 2013 Last revised: 14 Mar 2013
Date Written: March , 2013
The European Banking Union needs a single supervisor. Therefore, the establishment of the Single Supervisory Mechanism (SSM) is the first fundamental step in centralising powers over the banking sector within the Euro Area. This article examines the significant legal issues raised by the creation of the SSM as reflected in the legislative proposals put forward by the Commission and the Council, in the light of policy considerations and political pressures. In particular, the article analyses the role of the ECB as prudential supervisor, including its scope and powers, its interaction with national supervisory authorities, governance arrangements, independence and accountability. The article also considers the implications for the non-Euro Area Member States which opt into the SSM, the Member States which choose not to participate (in particular the UK), the European Banking Authority and the European Systemic Risk Board. The article concludes by attempting a first evaluation of the emerging SSM, taking into account that many details remain to be refined. The short term challenge for the SSM will be to build up its institutional capacity. In the longer term, the SSM’s performance could be affected by its own institutional design (forged under legal constraints and political compromise) and by the arduous process of completing the single regulatory rulebook for the European Union.
Keywords: Single Supervisory Mechanism, Banking Union, ECB, Euro Area, EU single market, European Banking Authority, European Systemic Risk Board
JEL Classification: E50, E58, G18, G28, K23
Suggested Citation: Suggested Citation