The Centralisation of Prudential Supervision in the Euroarea: The Emergence of a New ‘Conventional Wisdom’ and the Establishment of the SSM

Abstract

This article provides an account of how, after the Eurozone sovereign crisis, the centralisation of banking prudential supervision in the Euroarea became ‘conventional wisdom’. But it also contends that the transition to a new centralising conventional wisdom is still partial and incomplete. To this end, the article analyses the legal prudential obstacles still preventing the emergence of a truly single prudential jurisdiction, coincident with the single monetary jurisdiction. The article is divided into five sections. Section 1 briefly describes the “historical novelty” of a single currency area comprising many separate prudential supervisory jurisdictions and its “permanence” until the Eurozone sovereign crisis. Section 2 analyses the legal framework applicable to the new Single Supervisory Mechanism and the degrees of legal variance in the applicability of prudential requirements across participating Member States. Section 3 summarily analyses one specific aspect of this legal variance: “national powers”. Section 4 briefly deals with the exercise of Options and Discretions available in Union Law within the SSM. Section 5 concludes. Centralised Prudential supervision, Single Supervisory Mechanism, European Central Bank, European Integration, National Competent Authorities, Capital Requirements Regulation, Legal Framework, Banking Union, Euroarea, Single Currency