It establishes the conditions and procedures for close cooperation within the Single Supervisory Mechanism (SSM) between the European Central Bank (ECB) and non-euro European Union (EU) Member States.
Bulgaria and Croatia were the first two non-euro-area Member States that entered into close cooperation with the ECB starting on 1 October 2020.
Following the adoption of the euro by Croatia on 1 January 2023, Hrvatska narodna banka (the Croatian central bank) became a full member of the SSM and a member of the Eurosystem. This meant that close cooperation between that bank and the ECB came to an end.

KEY POINTS

The European system of banking supervision (SSM) was established as the system of banking supervision composed of the ECB and the national competent authorities (NCAs) of participating Member States to ensure safe and sound banks, a stable and integrated financial system and the consistent supervision of all banks. All euro-area countries participate automatically in European banking supervision.

Member States that do not use the euro can participate in the SSM by requesting that close cooperation be established between the ECB and their NCA. Once close cooperation has been established, these Member States can join both the SSM and the Single Resolution Mechanism, which ensures the orderly resolution of failing banks.

The establishment of close cooperation contributes to the safety and soundness of banks and fosters the process of financial integration across the single market.

Under close cooperation, the NCAs are obliged to adopt any measure in relation to supervised entities at the request of the ECB. The legal acts adopted by the ECB are binding and enforceable, and the NCAs must provide the ECB with all the information necessary for the purposes of carrying out the ECB’s supervisory tasks.

The SSM regulation, the SSM framework regulation and the ECB decision on close cooperation describe the process of establishing close cooperation and how it works.

Steps for the establishment of close cooperation:

1.
the non-euro-area Member State formally requests to enter into close cooperation under the SSM;
2.
the non-euro-area Member State prepares and adopts national legislation that allows the ECB to exercise its supervisory tasks within the framework of close cooperation, and the ECB assesses that legislation;
3.
the ECB carries out a comprehensive assessment of the banks of the Member State concerned, similar to that conducted on euro-area banks in 2014 before the SSM was set up;
4.
the ECB adopts a decision that indicates how supervisory tasks will be transferred to the ECB and when the close cooperation will commence.

Supervision under close cooperation.

Once close cooperation is established, the Member State concerned becomes a member of the SSM and its NCA is in a position comparable to all other NCAs of Member States participating in the SSM. This means that significant credit institutions in the countries participating in close cooperation will be supervised by the ECB via instructions given to the NCAs, and credit institutions classified as less significant will continue to be supervised by the NCAs, with the ECB performing an oversight role.

Suspension or termination of close cooperation:

the ECB may suspend the close cooperation for up to 6 months, giving reasons for its decision;
the termination of the close cooperation can be initiated by the ECB or by the Member State with which there is close cooperation.

Once a Member State with which there is close cooperation fulfils the necessary conditions for the adoption of the euro and that Member State adopts the euro, it becomes a member of the Eurosystem.

FROM WHEN DOES THE LEGISLATION APPLY?

Regulation (EU) No 1024/2013 has applied since 3 November 2013.
Regulation (EU) No 468/2014 has applied since 15 May 2014.
Decision 2014/434/EU has applied since 27 February 2014.
Decision (EU) 2020/1015 has applied since 1 October 2020.

BACKGROUND

For further information, see:

Close cooperation with the ECB: An entryway to banking union (ECB)
ECB establishes close cooperation with Bulgaria’s central bank (ECB)
Frequently asked questions concerning Bulgaria’s request to establish close cooperation with the ECB (ECB)
Croatia introduces the euro (ECB)
Banking union (European Commission).

MAIN DOCUMENTS

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 (SSM Regulation) (OJ L 287, 29.10.2013, pp. 63–89).

Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities (SSM Framework Regulation) (ECB/2014/17) (OJ L 141, 14.5.2014, pp. 1–50).

Decision 2014/434/EU of the European Central Bank of 31 January 2014 on the close cooperation with the national competent authorities of participating Member States whose currency is not the euro (ECB/2014/5) (OJ L 198, 5.7.2014, pp. 7–13).

Decision (EU) 2020/1015 of the European Central Bank of 24 June 2020 on the establishment of close cooperation between the European Central Bank and Българска народна банка (Bulgarian National Bank) (ECB/2020/30) (OJ L 224I, 13.7.2020, pp. 1–3).

Title and reference

European Central Bank – close cooperation within the Single Supervisory Mechanism with non-euro EU Member States

SUMMARY OF:

WHAT IS THE AIM OF THE LEGISLATION?

KEY POINTS

FROM WHEN DOES THE LEGISLATION APPLY?

BACKGROUND

MAIN DOCUMENTS

RELATED DOCUMENTS