Taking euro-bank supervision to cruising speed

 

The Single Supervisory Mechanism (SSM) remains a big achievement on the road to creating ‘more Union’ in Europe's financial markets, as well from the perspective of financial stability, operational efficiency and accountability in the participating countries. According to discussions at a CEPS lunchtime meeting on March 18th, the next step is to harmonise remaining forms of national options and discretion, as well those set by law, and ensure even more consistency in supervisory methods. The example of the approaches to the treatment of capital requirements under Pillar 2 of Basel was cited, which could provide a loophole for discriminatory treatment of banks. On the other hand, there is the request for proportionality, and the supervision of the less significant and smaller institutions. From an institutional perspective, the big question is how cooperation will work in practice between the ECB and the Single Resolution Board. Clarification on these and other issues is expected to emerge in the European Commission’s review of the SSM, which will be published in the course of this year.