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Brussels, 19 March 2013
An important step towards a real banking union in Europe: Statement by Commissioner Michel Barnier following the trilogue agreement on the creation of the Single Supervisory Mechanism for the eurozone
We have taken an essential step today and I congratulate the European Parliament and the Council for having reached agreement on a major legislative package entrusting the European Central Bank with responsibility for the supervision of banks in the framework of the Single Supervisory Mechanism and adapting the operating rules of the European Banking Authority (EBA) to this new framework. I would in particular like to acknowledge the roles played by the Irish Presidency and of the rapporteurs Marianne Thyssen and Sven Giegold.
This is a first fundamental step towards a real banking union which must restore confidence in the eurozone's banks and ensure the solidity and reliability of the banking sector. This will contribute to strengthening the single market and to guaranteeing financial stability.
The eurozone is at this moment exposed to difficulties. If banking union were already in place and functioning today, the management of these difficulties would be considerably easier. These events strengthen our determination to reform the governance of banks in a meaningful way.
A few weeks after the Economics and Finance Ministers confirmed at their last meeting the terms of the agreement on rules imposing stricter capital requirements for banks (the CRDIV package), we also have agreement on the creation of an objective and impartial European Supervisor, who should be operational as of mid-2014.
But the architecture of banking union does not stop there. We are also working on the establishment of an integrated European resolution system for all countries participating in the banking union. This system will be built on the foundations of the Directive on Banking Resolution for Member States which is due to be adopted shortly.
With today's agreement, a fundamental pillar of banking union has been put in place: I would like to thank the European Parliament whose constructive attitude has allowed an excellent final result to be reached in record time. I am confident that the European Parliament will soon confirm its agreement in a plenary vote. The agreement opens the way to a comprehensive and balanced legislative package, which while granting the European Central Bank responsibility for all banks in the eurozone, establishes a clear division of tasks between national supervisors and the ECB.
In addition, the agreement protects the integrity of the single market, not only because the Single Supervisory Mechanism is open to Member States outside the eurozone, paving the way to an enlarged banking union, but also because it confirms the role of the European Banking Authority by strengthening its powers.
The text agreed by the Parliament and the Council also establishes rules on the governance and responsibility of the European Central Bank which ensures a strict separation between its supervisory tasks and its monetary policy functions. It also foresees appropriate mechanisms to strengthen the democratic responsibility of the ECB for its supervisory activities.
A strong signal of commitment and responsibility has thus been given today by the EU to stabilise the eurozone, strengthen the single market and form a base to kickstart growth.
On 12 September 2012 the Commission adopted two proposals for the establishment of a single supervisory mechanism (SSM) for banks led by the European Central Bank (ECB). The proposal for the SSM regulation aimed to confer upon the ECB specific supervisory tasks over credit institutions in the Euro area. The accompanying proposal for the regulation on the European banking Authority (EBA) aimed to introduce limited amendments to the Regulation setting up the EBA to ensure a balance in its decision making structures between the euro area and non-euro area Member States.
This legislative package followed the Euro area summit on 29 June 2012, which called on the Commission to present proposals for the setting up of a single supervisory mechanism as a precondition for a possible direct recapitalisation of banks by the ESM (European Stability Mechanism).
A unanimous agreement was reached in the ECOFIN Council on 13 December on the Commission's proposal for a Single Supervisory Mechanism. The European Council of 14 December welcomed the agreement reached and called on the co-legislators “to rapidly agree so as to allow its implementation as soon as possible”.
Following intensive trilogue negotiations during January and February, co-legislators reached agreement on the package on 19 March 2013.
Key elements of the SSM:
The establishment of the Single Supervisory Mechanism (SSM) is a first step towards a banking union and one of the pre-conditions for direct recapitalisation by the ESM. An integrated “Banking Union” will also include a common bank resolution mechanism, underpinned by a single rulebook.