Single Supervisory Mechanism
| European Union regulation | |
| Title | Conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions |
|---|---|
| Applicability | All EU member states. However, only eurozone states and EU member states with "close cooperation agreements" (collectively referred to as participating SSM members), will become subject to the supervision tasks conferred to ECB. |
| Made by | Council of the European Union |
| Made under | of the TFEU. |
| Journal reference | OJ L287, 29.10.2013, p.63–89 |
| History | |
| Date made | 15 October 2013 |
| Came into force | 3 November 2013 |
| Implementation date | 4 November 2014. |
| Current legislation | |
The Single Supervisory Mechanism (SSM) is the name for the mechanism which has granted the European Central Bank (ECB) a supervisory role to monitor the financial stability of banks based in participating states, starting from 4 November 2014. Eurozone states are obliged to participate, while Member states of the European Union outside the eurozone can voluntarily participate. As of 3 November 2014[update], none of the non-eurozone member states had opted to join, although the ECB reported that some of them had expressed an interest in joining, and that talks were being held with each of them to map which changes to national legislation need to be adopted in order to become a SSM member. The SSM is the first established part of the EU banking union, and will function in conjunction to the Single Resolution Mechanism.
The Single Supervisory Mechanism was decided as part of the euro area shift towards banking union at the summit of euro area heads of state and government, in Brussels on 28–29 June 2012. In compliance with the decisions made then, the European Commission developed its proposal for a Council Regulation establishing the SSM during the summer of 2012, and published it on 12 September 2012.
The ECB "welcomed" the proposal, but Chancellor of Germany Angela Merkel questioned "the capacity of ECB to monitor 6,000 banks." The vice-president of the European Commission, Olli Rehn, responded that the majority of European banks would still be monitored by national supervisory bodies, while "ECB would assume ultimate responsibility over the supervision, in order to prevent banking crises from escalating."
Some economists remained skeptical, pointing to the composition of the SSM board as an issue. The Commission proposes a board consisting of a total of 23 members, with 17 representatives of bank supervisors of member-states plus one chairman, one vice-chairman and four other members. Thus, the large majority of the SSM board would consist of national supervisors who "do not appreciate ECB interference in their daily national supervisory activities."
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