Abstract
The first judgement of the General Court (EU) pertaining to the Single Supervision Mechanism (SSM) raised an issue concerning the source of the shared supervisory powers in the system of EU prudential supervision. In the General Court’s view, the SSM Regulation conferred on the European Central Bank (ECB) exclusive powers to carry out specific prudential supervisory tasks vis-a-vis all euro area credit institutions (significant and less significant). At the same time, the ECB’s national counterparts assist the former in implementing its supervisory tasks vis-a-vis less significant credit institutions. We argue that such a scheme requires a clear accountability relationship also between the ECB and the national competent authorities (NCAs), something that is not fully fledged in the current legal framework.
Highlights
Prudential supervision in the EU has drastically changed since the 2014 entry into force of Regulation EU/1024/2013 establishing the Single Supervisory Mechanism (SSM Regulation).[1]
In the General Court’s view, the SSM Regulation conferred on the European Central Bank (ECB) exclusive powers to carry out specific prudential supervisory tasks vis-à-vis all euro area credit institutions
The ECB’s national counterparts assist the former in implementing its supervisory tasks vis-à-vis less significant credit institutions. We argue that such a scheme requires a clear accountability relationship between the ECB and the national competent authorities (NCAs), something that is not fully fledged in the current legal framework
Summary
Prudential supervision in the EU has drastically changed since the 2014 entry into force of Regulation EU/1024/2013 establishing the Single Supervisory Mechanism (SSM Regulation).[1]. It would not provoke arguments revolving around the Meroni doctrine, which relates to the limits of delegating discretionary powers to agencies.[15] Second, setting up a centralised, pan- European system of banking supervision would – arguably – contribute to putting an end to the vicious circle of sovereign-bank doom loop.[16] When it comes to questions of hierarchy, the overarching principle in the SSM Regulation is that the ECB is exclusively responsible for the effective and consistent functioning of the SSM.[17] For example, NCAs must follow the instructions of the ECB,[18] which implies a hierarchy between the EU institution and its national counterparts. 14 See: Benedikt Wolfers and Thomas Voland, ‘Level the Playing Field: The New Supervision of Credit Institutions By the European Central Bank’ (2014) 51 Common Market Law Review 1463
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