Banking Regulation and Supervision in Europe

The chapter underlines that although the framework of the Single Supervisory Mechanism (SSM) is overall comprehensive and well advanced, however it remains incomplete, and several challenges remain to overcome. First, we need to notice that if a single resolution authority, established in 2015, assumed full responsibilities in 2016, a single deposit insurance, though having been recognised as an integral part of that construction, does not exist yet, nor there is an agreed time frame for it. This further step is instead necessary to complete and harmonize the Single Resolution Mechanism (SRM) in the euro area. Furthermore, some issues remain for banks and supervisors relating to regulatory changes. The legislative framework, which underpins banking supervision, allows several elements of flexibility, available to supervisors or Member States. Moreover, the need of transposition into national legislation opens the door to legislative differences between countries and prevents a truly level playing field within the banking union.