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).
The Single Resolution Mechanism is made up of the Single Resolution Board and the National Resolution Authorities in Eurozone countries, Bulgaria and Croatia. It protects financial stability and the taxpayer by planning for and managing bank failures. The SRM is the second pillar of the Banking Union, providing centralised and independent decision-making on bank resolution, ensuring that the public interest and critical economic functions are protected.