Article

The Single Supervisory Mechanism

The Single Supervisory Mechanism (SSM) is a new system of financial supervision that will be enforced from 4 November 2014. On this date, the European Central Bank (ECB) will take over the supervision of Systemically Important Banks (SIB).

Executive Summary

The main purpose of the SSM is to centralise and harmonise the supervision of the banking system in order to ensure financial stability of the eurozone and participating countries. The SSM will cooperate with the National Competent Authorities (NCA) of participating EU countries to perform this supervision. In particular (according to ECB/2014/17), “a joint supervisory team shall be established for the supervision of each significant supervised entity or significant supervised group in participating Member States”. Each joint supervisory team shall be composed of staff members from the ECB and from the NCA.

On the one hand, the setting up of the SSM demonstrates the European Union’s determination to supervise financial institutions at the European level so as to restore confidence in European financial institutions and their stability. On the other hand, it emphasises the trend toward data intensive regulation, requiring more—and better—data from regulated entities.

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