Commission proposes Single Resolution Mechanism for banks
The European Commission has today proposed a Single Resolution Mechanism (SRM) to ensure that bank failures can be managed efficiently, with minimal costs to taxpayers and the real economy.
The mechanism would apply to banks participating in the Banking Union that are subject to common supervision by the European Central Bank.
Commission President José Manuel Barroso said: "With this proposal, all the elements are on the table for a Banking Union to put the sector on a sounder footing, restore confidence and overcome fragmentation in financial markets. We have already agreed common European supervision for banks in the euro area and other Member States who wish to take part. Today's proposal complements that with a strong and integrated single system for dealing with failing banks. We cannot eliminate the risk of future bank failures, but with the Single Resolution Mechanism and the Resolution Fund it should be banks themselves – and not European taxpayers – who should shoulder the burden of losses in the future."
Since 2008, the Commission has tabled over 30 pieces of legislation to build a sounder and more effective financial sector. In the Blueprint on a deep and genuine Economic and Monetary Union, the Commission set out how a more integrated approach is necessary in the euro area.
The Single Resolution Mechanism is the culmination of efforts to deal with the particular nature of the crisis in the euro area. It complements the Single Supervisory Mechanism, ensuring that bank supervision and resolution are centralised for Member States participating in the Banking Union. This is necessary to curb uncertainty and prevent bank runs and contagion to other parts of the euro area.
The proposal will now be discussed by the Council and Parliament with a view to reaching an agreement as soon as possible.