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The SRM will consist of a board and a fund, and will cover banks overseen by the Single Supervisory Mechanism (SSM) which became operational last month, and represents a concluding part of the new Banking Union.
The board will be the European resolution authority for the Banking Union and will work in close cooperation with national resolution authorities of participating member states.
For the first three months of next year it will operate as a transitional taskforce from the EU executive, after which it will take up its own premises in Brussels and become the only such self-financing agency based in the Belgian capital.
It will be run on operating contributions from the banking sector, with a budget estimated at €22 million for the first year.
The board will have broad powers to prepare for the resolution of stricken banks. Upon notification from the ECB that a bank is failing or likely to fail, the board will adopt a resolution scheme including relevant resolution tools and determine how much of the Single Resolution Fund should be used.
The board will monitor national resolution authorities’ decisions, but has the power to intervene if national resolution authorities do not comply with its decisions.
The total target size of the Fund will equal 1% of the covered deposits of all banks in member states participating in the Banking Union.
The fund should represent around €55 billion when fully operational according to EU officials.
The Board will start work on developing resolution plans for credit institutions from January 2015 with the aim of being fully operational from January 2016.
Single Resolution Mechanism (European Commission)