In parallel to the introduction of the SSM, policymakers pressed ahead with efforts to create a regime for the orderly recovery and resolution of banks in 2014 without jeopardising financial stability or using taxpayers’ money, if at all possible. This project is the second pillar of the European banking union.
In this context, the EU regulation establishing a Single Resolution Mechanism (SRM) created the two elements of this pillar: on the one hand, a European resolution board and on the other, a single bank-financed resolution fund. The SRM, which will enter into force in 2016, will apply the liability principle for banks as well.