|Author (Corporate)||European Commission|
|Series Details||(2012) 510 final (12.9.12)|
Over the past four years, the EU has responded decisively to the economic and financial crisis. Significant improvements have been made to the Economic and Monetary Union (EMU), and a substantial financial reform agenda is being implemented, fulfilling commitments made in the G20 in response to the financial crisis, and to make financial institutions and markets more stable, more competitive and more resilient.
Completing this reform of the EU regulatory framework is essential but will not be sufficient to successfully address significant threats to financial stability across the Economic and Monetary Union. Further steps are needed to tackle the specific risks within the Euro Area, where pooled monetary responsibilities have spurred close economic and financial integration and increased the possibility of cross-border spill-over effects in the event of bank crises, and to break the link between sovereign debt and bank debt and the vicious circle which has led to over €4.5 trillion of taxpayers money being used to rescue banks in the EU.
Coordination between supervisors is vital but the crisis has shown that mere coordination is not enough, in particular in the context of a single currency and that there is a need for common decision-making. It is also important to curtail the increasing risk of fragmentation of EU banking markets, which significantly undermines the single market for financial services and impairs the effective transmission of monetary policy to the real economy throughout the Euro Area.
The Commission has therefore called for a banking union to place the banking sector on a more sound footing and restore confidence in the Euro as part of a longer term vision for economic and fiscal integration. Shifting the supervision of banks to the European level is a key part of this process, which must subsequently be combined with other steps such as a common system for deposit protection, and integrated bank crisis management.
This communication accompanies two legislative proposals, respectively for the setting up of a single supervisory mechanism by conferring specific tasks on the European Central Bank (ECB) concerning policies relating to the prudential supervision of credit institutions and for adaptations to the Regulation setting up the European Banking Authority (EBA). These legislative proposals mark a first important step which will make a qualitative improvement in financial stability and confidence in the Euro Area in particular. This communication sets the single supervisory mechanism in context and indicates further work towards a banking union beyond these first proposals.
|Subject Categories||Business and Industry, Economic and Financial Affairs|
|Countries / Regions||Europe|