European Commission Proposes New Single Supervisory Mechanism for Banks

The European Commission has announced proposals for a single supervisory mechanism for banks in the Euro area (the "SSM"), with ultimate responsibility for certain supervisory tasks resting with the European Central Bank.

The proposal package includes a regulation conferring powers on the ECB to supervise all banks in the Euro area, with a voluntary opt-in for non-Euro countries. The SSM would sit alongside the three other components of an integrated "banking union" - the single rulebook in the form of capital requirements, harmonized deposit protection schemes, and a single European recovery and resolution framework.

The Commission has suggested that the SSM should be in place by January 1, 2013, with a phasing-in period to be completed by January 1, 2014.