Inside this Topic Guide
Banking Union comprises the following elements:
- the Single Supervisory Mechanism (SSM), which makes the European Central Bank (ECB) the common supervisor for euro area banks with direct supervisory responsibility for "significant" SSM banks. For less significant SSM banks, national supervisors are responsible for day-to-day supervision subject to the control of the ECB;
- the Single Resolution Mechanism (SRM), which is a system for resolving failing euro area banks and applies the Bank Recovery and Resolution Directive (BRRD) to SSM banks in a uniform manner via a Single Resolution Board (SRB) and a shared fund to cover costs paid for by banks (Single Resolution Fund - SRF); and
- a proposed European Deposit Insurance Scheme (EDIS) – in November 2015 the Commission presented a legislative proposal for a system initially based on reinsurance, which will keep in place Member States' national schemes established under the recast Deposit Guarantee Scheme Directive (DGSD2).
In addition, the system is underpinned by a facility for the direct recapitalisation of failing banks by the European Stability Mechanism (ESM).
Details of legislation establishing the Banking Union are available in the legislation section of this guide.
The SSM and the SRM also include non-euro area Member States with which the ECB has established close cooperation arrangements (currently, Bulgaria and Croatia are also participating Member States).
Fundamentally, the aim of the SSM and SRM is to ensure uniform implementation within the participating Member States of the "single rulebook" being the broader set of legislative instruments with which all EU banks (inside and outside the euro area) must comply including:
- Capital Requirements Directive/Regulation (CRD / CRR) (as amended, including by CRDV / CRR2)
- Bank Recovery and Resolution Directive (BRRD) (as amended, including by BRRD2)
- Deposit Guarantee Schemes Directive 2 (DGSD2)
Under the draft Investment Firms Directive (IFD) and Investment Firms Regulation (IFR) some systemically important investment firms may be reclassified as credit institutions and therefore become subject to the SSM.
SSM – Established by SSM Regulation and EBA Amending Regulation - both in force since autumn 2013. ECB began direct supervision of significant banks and began oversight of SSM on 4 November 2014.
EDIS – Commission launched legislative proposal for Regulation amending the SRM Regulation to establish a European Deposit Insurance Scheme on 25 November 2015.
SRMR2 applied from 28 December 2020.
EU Council and EU Parliament are considering the Commission's legislative proposal for the EDIS through the ordinary legislative process.
IFR and IFD (which reclassifies certain systemically important investment firms as credit institutions) was published in the Official Journal on 5 December 2019 and applied from 26 June 2021.
The European Commission published a BRRD/SRMR/DGSD review roadmap on 11 November 2020 and launched a technical consultation on the revision of the EU's crisis management and deposit insurance (CMDI) framework on 26 January 2021 and a public consultation on 25 February 2021. The SRB published its response to the technical consultation on 22 April 2021, and a blueprint from the CMDI review on 18 May 2021. The Commission is expected to adopt legislative proposals in late 2022 or early 2023.
|Marc Benzler (Frankfurt)||Frank Graaf (Amsterdam)|
|Chris Bates (London)||Steve Jacoby (Luxembourg)|
|Lucio Bonavitacola (Milan)||Frédérick Lacroix (Paris)|
|José Manuel Cuenca (Madrid)||Caroline Meinertz (London)|
|Caroline Dawson (London)||Deborah Zandstra (London)|
|Simon Gleeson (London)|
On 18 April 2023, the European Commission published a package of proposals to reform the crisis management and deposit insurance (CMDI) framework relating to banks and other credit institutions, as set out in the Bank Recovery and Resolution Directive (2014/59/EU) (BRRD), Single Resolution Mechanism Regulation ((EU) 806/2014) (SRMR) and Deposit Guarantee Schemes Directive (2014/49/EU) (DGSD).
The Commission has invited the European Parliament and Council to reach agreement on the proposed reform of the CMDI framework before the next Parliamentary elections in 2024. In its communication, it also noted the complementarity between the proposed CMDI reforms and the 2015 proposal for a European deposit insurance scheme (EDIS), with political negotiations on the latter stalled, and suggested that a renewed effort to reach a political agreement on EDIS should be a priority.
Proposed amendments to the SRMR relate to issues including the public interest assessment (PIA) and the use of DGS in resolution
- Legislative Observatory Procedure File 2023/0111(COD) - link forthcoming
- Proposed amendments to SRMR as regards early intervention measures, conditions for resolution and funding of resolution action
Proposed amendments to the DGSD relate to issues including the scope of depositor protection, temporary high balances (THBs) and preventive measures.
- Legislative Observatory Procedure File 2023/0115(COD) - link forthcoming
- Proposed amendments to DGSD as regards the scope of deposit protection, use of DGSs funds, cross-border co-operation, and transparency
For information on the proposed amendments to the BRRD, please see the BRRD Topic Guide.
Background and preparatory materials
- (18 April 2023) ECB and SRB joint press release on CMDI reform proposals
- (18 April 2023) Eurogroup President statement on CMDI reform proposals
- (16 June 2022) Eurogroup statement on the future of the Banking Union
- (18 May 2021) SRB blueprint for the CMDI review
- (19 April 2021) Call for advice to the EBA regarding funding in resolution and insolvency as part of the review of the CMDI framework
- (22 October 2021) EBA technical advice
- (25 February 2021) Public consultation on the review of the CMDI framework
- (26 January 2021) Technical consultation on the review of the CMDI framework
- (11 November 2020) BRRD/SRMR/DGSD Review Roadmap