By / July 15, 2013

Towards the European Banking Union: The Single Supervisory Mechanism

The crisis in the euro area has been characterised by close ties between the rescuing of banks and government debt….

© Comugnero Silvana / Fotolia
Euro coin and puzzles
© Comugnero Silvana / Fotolia

The crisis in the euro area has been characterised by close ties between the rescuing of banks and government debt. In order to break this vicious circle, the European Commission proposed on 12 September 2012 the creation of a Single Supervisory Mechanism (SSM) as a first step towards the creation of a pan-European regulatory framework for the banking sector. The European Commission, as also stated in its communication “Roadmap towards a banking union“, seeks to take the Economic and Monetary Union (EMU) forward by shifting banking supervision to the European level, in order to strengthen the financial stability and confidence particularly in the euro area. The proposal comprises two parts. First, a Council regulation would attribute to the ECB the role of a “prudential supervisor” for credit institutions. Second, a regulation of the European Parliament and the Council would amend the regulation establishing the European Banking Authority (EBA), changing its voting structure and assigning the EBA the task of creating a binding single supervisory rulebook for the European Central Bank (ECB) and other EU supervisors. The European Commission has also proposed on 6 June 2012 the establishment of a framework for the recovery and resolution of credit institutions and investment firms. Two agreements were recently reached with regards to the establishment of the SSM: on 27 June 2013, the European finance ministers came to an agreement on the so-called ‘bail-in’ procedure; on 19 March 2013 a trilogue compromise was reached that, among other things, assigns a greater say to the European Parliament in the appointment of the supervisory board’s chair.

This document provides a collection of references to articles, analyses, stakeholder opinions and legislative procedures concerning the establishment of the SSM.


Finance ministers strike deal to stem bank bailouts / EurActive, 2013. This article discusses the compromise reached among the European finance ministers on Thursday 27 of June 2013 concerning the bail-in procedure, a process in which shareholders and bondholders shall bear the cost of future bank failures.

Progress report: European Union’s move to banking union / Spiegel B., 2013, Financial Times. The report provides an overview on the 4 main components of the banking union (single supervisor, direct bank recapitalisation, bail-in rules, and single resolution authority), highlighting both their objectives as well as their current status of implementation. Access to this article requires registration to the Financial Times.

A single EU banking supervisory mechanism / de Jong W., 2013, EP Library Briefing. This Briefing provides a short and concise explanation of the two main proposals surrounding the SSM and how that fits the broader scope of the Banking Union.


The Single Supervisory Mechanism: A Sound First Step in Europe’s Banking Union? / Verhelst, S., 2013, EGMONT Institute. This paper analyses the SSM and what role it has in establishing a banking union.

The European Single Supervisory Mechanism / Ferran E., Babis V., 2013, Legal Studies Research Paper Series, University of Cambridge. The article analyses the most relevant legal issues that arose since the European Commission’s proposal for the creation of the SSM. To quickly obtain the document, click on “download document” and then on “download anonymously”.

Banking Union: the Single Resolution Mechanism / Policy Department A Publication, 2013, European Parliament. The study explores different options for the future design of the single resolution mechanism (SRM).

From supervision to resolution: next steps on the road to European banking union / Véron, N., Wolff G. B., 2013, Bruegel. This policy contribution is based on a paper requested by the European Parliament’s Committee on Economic and Monetary Affairs (ECON), and it aims to help clarify key policy options in order to bring the creation of the banking union forward.

Banking Union and a Single Banking Supervisory Mechanism / Policy Department A Publication, 2012, European Parliament. This document provides a compilation of notes concerning a first evaluation of the European Commission’s proposals for the SSM.

Banking Union for Europe. Risks and Challenges / Thorsten B. (ed.), 2012, Centre for Economic Policy Research. Analysis published in the aftermath of the European Commission’s proposal on the SSM, which brings together the views of leading European and US economists on some of the obstacles surrounding the creation of a banking union, proposing policy-recommendations as well as offering solutions.

Stakeholder views

European Parliament

Related parliamentary questions: E-006453-13; E-005765-13 ; E-005671-13; P-011094-12; E-008047/2012.

Summary of the amendments on the proposal of the regulation 2012/0244(COD) amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority, in regards with its interaction with the draft regulation 2012/0242(CNS) conferring specific tasks on the ECB concerning policies relating to the prudential supervision of credit institutions.

Council of the European Union

Council agrees position on bank resolution / Council of the European Union, Press Release, 2013. Press release exposing the provisions agreed by the Council with regards to the proposal of a directive 2012/0150 (COD) on the recovery and resolution of credit institutions and investment firms.

Bank supervision: Council confirms agreement with EP / Council of the European Union, Press Release, 2013. In this press release, the Council summaries the compromise reached with the European Parliament on 19 March 2013 with regards to the draft regulation 2012/0242(CNS) and the proposal of a regulation 2012/0244(COD) amending regulation (EU) No 1093/2010.

European Commission

Banking union / European Commission’s Portal on the Banking Union. This page contains the latest updates on the progresses towards the banking union.

An important step towards a real banking union in Europe: Statement by Commissioner Michel Barnier following the trilogue agreement on the creation of the Single Supervisory Mechanism for the eurozone / European Commission, 2013, Press Release. Statement made by the Commissioner Michel Barnier in the wake of the compromise of the 19 March 2013 between the European Parliament and the Council. The press release also analyses the key elements characterising the SSM.

European Council

European Council 27/28 June 2013 Conclusions / European Council, Section 3, 2013. At its last meeting in June, the European Council, in line with its conclusions of December 2012 and March 2013, sets out the key priorities for the completion of the Economic and Monetary Union through a sound banking union.

European Central Bank

The Single Resolution Mechanism: Why it is needed / Cœuré B., 2013, European Central Bank. In this speech given at the International Capital Market Association Annual General Meeting, Mr. Cœuré discusses the importance of a Single Resolution Mechanism within the context of the crisis and proposes what the main features of this mechanism should be.

European Economic and Social Committee

Banking Union Package / Economic and Social Committee, 2012. Supportive opinion on the package measures set out by the European Commission’s roadmap towards a banking union.

Industry association – European Banking Federation

Position of the European Banking Federation on the proposals for a Single Supervisory Mechanism (SSM) / European Banking Federation, 2012. This position paper shows positive support for the SSM and also provides several policy recommendations.

International organisation – Bank for International Settlements (BIS)

Implications of the Single Supervisory Mechanism (SSM) on the European System of Financial Supervision (ESFS) / Constâncio V., 2013, Bank for International Settlements. In his speech, Mr Constâncio states that despite the unavoidable changes that the SSM will bring to the functioning of the ESFS, those will actually strengthen it.

Related legislative procedures

Proposal for a Regulation of the European Parliament and the Council 2012/0244(COD) amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority).

Proposal for a Council Regulation 2012/0242(CNS) conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.

Proposal for a Directive of the European Parliament and the Council 2012/0150 (COD) establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directives 77/91/EEC and 82/891/EC, Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC and 2011/35/EC and Regulation (EU) No 1093/2010.

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