14 December 2012

ECOFIN Council: Proposal to confer supervisory tasks to ECB

The Council today set out its position on two proposals aimed at establishing a single supervisory mechanism (SSM) for the oversight of credit institutions. (The second proposal concerns the modification of Regulation 1093/2010 establishing the European Banking Authority.)

As the euro area’s central bank with extensive expertise in macro-economic and financial stability issues, the ECB is well placed to carry out supervisory tasks with a focus on protecting the stability of Europe’s financial system. Indeed in many Member States, Central Banks are already responsible for banking supervision. The ECB should therefore be conferred specific tasks concerning policies relating to the supervision of credit institutions at least within the euro area.

The ECB should be conferred those specific supervisory tasks which are crucial to ensure a coherent and effective implementation of the Union's policy relating to the prudential supervision of credit institutions, while other tasks should remain with national authorities.

The ECB will be responsible for the overall functioning of the SSM. Under the proposals, the ECB will have direct oversight of eurozone banks, although in a differentiated way and in close cooperation with national supervisory authorities. Non-eurozone Member States wishing to participate in the SSM will be able to do so by entering into close cooperation arrangements.

The ECB's monetary tasks would be strictly separated from supervisory tasks to eliminate potential conflicts of interest between the objectives of monetary policy and prudential supervision. To this end, a supervisory board responsible for the preparation of supervisory tasks would be set up within the ECB. Non-eurozone countries participating in the SSM would have full and equal voting rights on the supervisory board. The board's draft decisions would be deemed adopted unless rejected by the ECB governing council.

National supervisors would remain in charge of tasks not conferred on the ECB, for instance in relation to consumer protection, money laundering, payment services, and branches of third country banks.

The ECB will assume its supervisory tasks within the SSM on 1 March 2014 or 12 months after the entry into force of the legisation, whichever is later, subject to operational arrangements.

Proposal ECB

(Proposal EBA)

© European Council