- The Europeans agree on the single supervisory mechanism
- The banking union basis are laid
A key step was crossed towards banking union. On the morning of Thursday 13 December, the Finance Ministers of the twenty-seven EU members agreed on a single supervisory mechanism (SSM) promised since the summer. The compromise ends in a complex architecture that aims to define the treatment of non eurozone member states (cf. our overview).
It gives to the ECB the direct supervision of the largest financials institutions, the others will remain under national supervision. Nonetheless the ECB might decide to supervise any entity which represents a threat to financial stability, in its eyes. To this extent Brussels agreement is historic. It is the most important step concerning financial integration since the creation of the firewalls (EFSF, ESM).
The other three pillars of the banking union are still to be implemented, i.e. the uniform regulation, the deposit insurance fund and the resolution mechanism. As regards the project of political union, which was propelled by the Germans and should have been mentioned during the European Summit on 12 and 13 December, we will have to wait…
By Laurent QUIGNON