Single Resolution Mechanism is a cornerstone of the banking union, says the EESC
The European Economic and Social Committee looks forward to the establishment of the Single Resolution Mechanism (SRM) which it sees as a milestone in establishing the banking union. It will make the bank recovery and resolution rules consistent throughout the EU.
The EESC considers the banking union as the key measure for restoring confidence among business and the public, and as a way to return Europe to growth. It would also help to reduce the fragmentation of the internal market that still plagues business across Europe.
The Committee said that handling both supervision and bank resolution at the same level of authority was the move in the right direction. The former will be handled by the Single Supervisory Mechanism and the latter – by the Single Resolution Mechanism. The prerequisite for an effective SRM is its capacity to be mobilised quickly, said the EESC.
Turning to the Single Bank Resolution Fund, whose aim is to ensure financial stability and the effectiveness of bank resolution, the EESC highlighted the need to establish clarity on the legal basis of the fund. "The legal basis of the fund needs to be clarified as soon as possible and all the challenges involved in setting up the fund, such as the risk of moral hazard, have to be addressed in advance ", stated Daniel Mareels, (Employers Group, Belgium).
According to the Committee it is essential for the resolution fund to have sufficient financial resources in order for it to be efficient and effective. Members of the Resolution Board must be independent and democratic scrutiny of their decision ensured.
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The European Economic and Social Committee represents the various economic and social components of organised civil society. It is an institutional consultative body established by the 1957 Treaty of Rome. Its consultative role enables its members, and hence the organisations they represent, to participate in the EU decision-making process. The Committee has 353 members from across Europe, who are appointed by the Council of the European Union.