The SSM will create genuine European supervision, requiring the ECB to take responsibility for ensuring that the European banking sector is sound and safe. In the process of establishing the SSM, we need to further restore the health of the banking sector and confidence in it, thereby creating the conditions for a revival of credit provision to the real economy.
Because in the euro area about 80% of the financing of the real economy originates from the banking sector. Genuine banking integration is important in many respects. Why? Because a more integrated banking market intensifies competition by changing the focal point of the strategies of banks and other financial market participants. More competition means that existing capital is allocated more efficiently.