On the 8th November 2013, the European Central Bank published its opinion on the Single Resolution Mechanism (SRM).The ECB fully supports the establishment of the SRM. It believes that centralised decision- making on resolution matters will strengthen the stability of economic and monetary union and that the SRM provides a necessary compliment to the single supervisory mechanism. The proposed SRM Regulation contains three essential requirements for effective resolution:
- a single system;
- a single authority with decision-making powers;
- a single fund enhanced ex-ante by the banking sector.
The ECB considers it crucial that the responsibilities of the resolution and supervisory authorities are kept distinct.The ECB, or the national competent authorities, in line with the regulation on the single supervisory mechanism, should be solely responsible for assessing whether a credit institution is failing or likely to fail. The ECB also supports an earlier implementation of the bail-in tool because bail-in is a key resolution tool and having it in place would contribute towards legal certainty, consistency and predictability, thus avoiding ad-hoc solutions.The EC Opinion states that it is better to maintain a clear functional separation between supervision and resolution, thereby avoiding potential conflicts of interest.