What is the Banking Union?
In response to the recent financial crisis, the European Commission pursued a number of initiatives to create a safer financial sector for the Single Market. These initiatives form a Single Rulebook for all financial actors in the EU Member States. They include:
- stronger prudential requirements for banks;
- improved protection for depositors;
- rules for managing failing banks
In addition to this Single Rulebook, there was a commitment by EU institutions to implement further measures step by step: shifting supervision to the European level, establishing a single framework for bank crisis management and setting up a common system for deposit protection.
Resolution and the Banking Union
The SRM is one of the pillars of the Banking Union, alongside the Single Supervisory Mechanism (SSM). As of November 2014, the SSM is the new system of banking supervision in the Banking Union, comprising the European Central Bank (ECB) and national supervisory authorities of the participating Member States (National Competent Authorities). Under the SRM, centralised decision-making power in respect of resolution has been entrusted to the SRB, which derives its powers from both the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR).
The SRMR, adopted in July 2014, creates an integrated decision-making framework for resolution in the Banking Union as a complement to the SSM, which pursues a similar objective with respect to supervision.
The SRB is the resolution authority within the Banking Union. Together with the National Resolution Authorities (NRAs) it forms the SRM. The SRB works closely with, in particular, the NRAs of participating Member States, the European Commission (EC), the European Parliament (EP), the European Central Bank (ECB) and National Competent Authorities… (NCAs). The NRAs play a key role within the Banking Union. The mission of the SRB is to ensure an orderly resolution of failing banks with minimum impact on the real economy and the public finances of the participating Member States of the Banking Union.