On September 10, the European Commission issued a memo “Towards a Banking Union” and included questions such as what do we want to achieve with banking union and what have we done so far?
This Memo was followed up on September 12 with:
- a communication outlining the EC’s overall vision for a banking union;
- a legislative proposal for a Council Regulation to give specific tasks related to financial stability and banking supervision to the ECB; and
- a legislative proposal for a Regulation of the European Parliament that is designed to align the existing Regulation 1093/2010 on the establishment of the European Banking Authority to the modified framework for banking supervision.
In the new single mechanism, ultimate responsibility for specific supervisory tasks related to the financial stability of all euro area banks will lie with the European Central Bank.
The new structure will be in place from 1 January 2013, with the ECB taking supervisory responsibility for banks of systemic importance by 1 July 2013, and all Euro zone banks from 1 January 2014 - some 6,000 banks according to the Commission’s FAQ’s published alongside the Commission’s press release. Non-euro countries will be able to opt in to ECB supervision by ensuring that their national regulators co-ordinate closely with the ECB.
The Commission also called on the Council and European Parliament to adopt the proposed regulations by the end of 2012, together with the other three components of an integrated "banking union" – the single rulebook in the form of capital requirements (see IP/11/915), harmonized deposit protection schemes (see IP/10/918), and a single European recovery and resolution framework (see IP/12/570).