CHALLENGES FOR THE ESTABLISHMENT OF THE SINGLE RESOLUTION MECHANISM
CHALLENGES FOR THE ESTABLISHMENT OF THE SINGLE RESOLUTION MECHANISM

Summary/Abstract: After the political agreement on the establishment of the Single Supervisory Mechanism mainly within the Euro area, granting supervisory powers to the ECB, another important milestone for the future shape of the EU Banking Union is the design of the Single Resolution Mechanism (SRM). It is expected the European Commission to submit a legislative proposal related to the SRM after the summer break in 2013 but discussions on European level on its characteristics and features already started. The debate about the future design of the SRM was enhanced by a deal between the German Chancellor Angela Merkel and the French President Francois Hollande that was agreed on 31 May 2013. Many challenges for the future establishment and functioning of the SRM are identified even before the issue of the Commission proposal and the start of negotiations among Member States in the Council. The legal base for the Commission proposal and the eventual need of Treaty changes; the institution that shall take the responsibilities of Single Resolution Authority; the geographical and institutional scope of the SRM; the sequencing and interaction with other EU legal proposals and acts as well as SRM interaction with national solvency and resolution legislations; the architecture of SRM and its cooperation with other EU legal proposals and acts as well as SRM interaction with national solvency and resolution legislations; the architecture of SRM and its cooperation with other EU mechanisms and institutions; the arrangements between SRM and national resolution funds as well as many others are among some of the most important challenges for the SRM. There are many challenges but only one desirable option in front of the future SRM. The only desirable option is the success as the SRM will be "too big and too important to fail".

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