A study on single supervisory mechanism and single resolution mechanism of european banking union

Abstract

Banking union is the most important policy initiative to advance Euro-area integration since monetary union started in 1999. It involves the transfer of authority over banking policy from the national level to a pan-European institution level. A significant milestone in the process of building a more robust and resilient banking system in Europe completed through the Single Supervisory Mechanism (SSM), led by the European Central Bank (ECB) in November 2014 And the Single Resolution Board (SRB), launched in January 2015. This article analyses structure of the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM) of the European Banking Union. The Banking Union represents an unprecedented transfer of sovereignty from participating Member States to an EU institution for conducting banking supervision and for delegating authority to an EU agency to have responsibility for the preparation, implementation and funding of a European bank resolution regime. The article examines the SSM in the Lisbon Treaty and considers whether the European Central Bank's (ECB) strong form of independence is appropriate for its role as a bank supervisor, and whether its limited powers to take macro-prudential regulatory and supervisory measures are adequate to ensure banking sector stability. The article further argues that the SRM provides an important institutional step to build a more effective European banking Union.