European banking union has been saved
European banking union
The European Parliament voted on 12 September 2013, in favour of the Regulation setting up a Single Supervisory Mechanism (SSM) in the Eurozone. The outcome of this legislative process is the transfer of prudential regulatory powers from Eurozone national authorities to the European Central Bank.
With this new regulation, approximately 130 of the Eurozone’s biggest banks will be directly supervised by the European Central Bank (ECB). The ECB will also be responsible for the overall oversight of prudential supervision in the Eurozone. Non-Eurozone EU member states can opt-in to the SSM.
The key terms of the agreement reached on 12 September 2013 fix the roles of the ECB, the European Parliament and the Chair of the SSM in this new supervisory process. But the SSM is only one of the pillars of the Banking Union, and attention will now increasingly turn to the Single Resolution Mechanism (SRM), proposed by the EC on 10 July.
These proposals will fundamentally change the balance of responsibility for banking supervision within the Eurozone. Inevitably, the initial focus will be on the political debate and negotiation that will follow very quickly.