24 August 2012

Banking union - Commission to propose a single banking supervision mechanism

"A single supervision mechanism, built around the European Central Bank (ECB), will be a major step forward. It will send a strong political signal of credibility to our partners and to global investors. It will show once again the irreversibility of the euro. The Commission expects these proposals to be adopted by the end of the year, in order for the new system to enter into force early in 2013, as a key component of a 'banking union'."

"These proposals will address the key questions of the concrete functioning of the new supervisory role for the ECB; the relationship between national supervisors and the ECB; bridging the interface between euro area countries and those not participating in the euro and clarifying the role of the European Banking Authority in this context."

The background

At the European Council of 28/29 June, EU leaders agreed to deepen economic and monetary union as one of the remedies of the current crisis. At that meeting, the leaders discussed the report entitled 'Towards a Genuine Economic and Monetary Union'1, prepared by the President of the European Council in close collaboration with the President of the European Commission, the Chair of the Eurogroup and the President of the European Central Bank. This report set out the main building blocks towards deeper economic and monetary integration including banking union and fiscal union.

The banking union will build on recent major proposals to strengthen the regulation of the banking sector, notably regarding more harmonised capital requirements for banks, deposit guarantees and bank resolution. The aim of this additional integration is to break the link between Member States and their banks; restore the credibility of the financial sector; preserve tax payers' money and to ensure that banks serve society and the real economy.

Common and more integrated supervision is the first step. Once this is in place, the intention is to build on existing proposals for deposit guarantee schemes and bank recovery and resolution, moving towards a more integrated approach also in these areas in order to achieve a complete EU single rule book for banks.

Once common supervision is established, the way will be open for the European Stability Mechanism to take a decision enabling it to recapitalise banks directly.

Press release

© European Commission