The Commission has presented two proposals for Regulations to create a single mechanism for the supervision of all banks in the Eurozone. Under the first Regulation, the European Central Bank (ECB) will have ultimate responsibility for prudential supervision of all credit institutions in the Eurozone. This would include, among other tasks:

  • authorising credit institutions;
  • assessing acquisition and disposal of holdings in banks;
  • setting higher prudential requirements to protect financial stability when needed;
  • carrying out stress tests;
  • monitoring institutions’ governance arrangements;
  • participating in early intervention of failing banks;
  • agreeing with the Commission public bank recapitalisations;
  • facilitating the supervision of banks active in several member jurisdictions; and
  • coordinating a common position of Euro members in the European Banking Authority (EBA).

The second Regulation would ensure that decision making at EBA remains balanced. The Regulation establishing EBA would be amended to create an independent panel to decide issues on breach of law or binding mediation. EBA will continue creating the Single Rulebook for credit institutions across the whole Single Market.

National authorities from Eurozone member states will carry out day-to-day supervision and implementation of ECB decisions. Areas the Regulation does not confer on the ECB will remain under their full responsibility. These include consumer protection, payment services and money laundering.

The Commission expects the Council will adopt these proposals before the end of the year. The new regulations would then be phased in during 2013 and be fully in force on 1 January 2014. (Source: FAQ on Single Banking Regulation, Proposal for Regulation Conferring Prudential Supervision on ECB and Proposal for Regulation on EBA's Interaction with ECB)