This document is an excerpt from the EUR-Lex website
The European Central Bank’s role in supervising banks
The financial crisis demonstrated how problems can spread throughout the financial system and directly affect people’s lives. To strengthen oversight of the system, a single supervisory mechanism (SSM) has been created to oversee banks in the euro area and other participating European Union (EU) Member States.
The regulation establishes the SSM as a new system to supervise banks in the euro area and in other participating Member States. The SSM consists of the European Central Bank (ECB) and national supervisory authorities.
It gives the ECB, in cooperation with the national supervisors, responsibility for the effective and consistent functioning of the SSM.
The ECB does the following.
The ECB levies annual supervisory fees on the supervised credit institutions to cover the expenditure incurred by the ECB in relation to its supervisory tasks.
Member States whose currency is not the euro can participate in the SSM by requesting the establishment of close cooperation between the ECB and their national competent authority.
The ECB’s monetary policy and supervisory tasks are separated to avoid any conflict of interest between the two. Tough restrictions enforce the division, for example, allowing for the exchange of sensitive information only when certain safeguards are observed.
National supervisors remain responsible for issues such as consumer protection, money laundering, payment services and the supervision of branches of banks in Member States that are not part of the SSM.
The SSM is the first pillar of the EU’s banking union. The second is the single resolution mechanism, which aims to deal quickly and efficiently with failing banks.
With the creation of the SSM, changes were made to the voting arrangements of the European Banking Authority (EBA) to ensure that Member States participating in the SSM would not unduly dominate the EBA’s board of supervisors.
It has applied since 3 November 2013.
The creation of a truly European supervision mechanism weakens the link between banks and national sovereigns*. This indirectly helps to rebuild trust in the EU’s banking sector.
The recent financial crisis demonstrated how contagious problems in the financial sector of one country can be, especially in a monetary union, and how these problems can directly affect citizens across the euro area.
For further information, see
Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, pp. 63–89).
Regulation (EU) No 1022/2013 of the European Parliament and of the Council of 22 October 2013 amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards the conferral of specific tasks on the European Central Bank pursuant to Council Regulation (EU) No 1024/2013 (OJ L 287, 29.10.2013, pp. 5–14).
Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 225 of 30.7.2014, pp. 1–90).
Successive amendments to Regulation (EU) No 806/2014 have been incorporated into the original document. This consolidated version is of documentary value only.
last update 08.10.2021