ECB Says Resolution Mechanism Should Include SSM Members

Bloomberg: The European Central Bank said that a European Single Resolution Regime should cover all banks in countries for which the ECB will become supervisor next year.

“The SRM’s scope should encompass all credit institutions established in member statesparticipating in the Single Supervisory Mechanism,” the Frankfurt-based central bank said in a legal opinion published today. “The ECB fully supports the establishment of a Single Resolution Mechanism. It believes that centralized decision-making on resolution matters will strengthen the stability of Economic and Monetary Union and that the SRM will provide a necessary complement to the Single Supervisory Mechanism.”

The proposed resolution authority, along with European Central Bank oversight of euro-area lenders that is scheduled to start in full next year, form the core of an effort to create a banking union that aims to sever the link between banks and the sovereign. Prior to assuming its supervisory role, the ECB will conduct a comprehensive assessment of the banks that it will later oversee.

“The ECB welcomes the EU Council’s call to adopt the legislation within the European Parliament’s current term,” the ECB said. “Furthermore, it strongly supports the envisaged timeline for the SRM to become effective as of 1 January 2015. Once the Single Supervisory Mechanism is operational and supervision is elevated to the European level, the same needs to happen for resolution.”

reporters on this story: Stefan Riecher in Frankfurt