There is a vast amount of preparatory work which has to be ready 12 months after the regulation enters into force, including: selecting highly skilled staff; drawing up the final list of significant banks to be directly supervised by the ECB; harmonising supervisory approaches and reporting requirements; mapping the euro area banking system; developing a supervisory manual and publishing a framework regulation within six months after public consultation.
These tasks are already completed by around ninety per cent. The next big challenge is the design and undertaking of the asset quality review (AQR). The comprehensive balance sheet assessment is essential for ensuring that the SSM gets off to a good start and avoids reputational damage stemming from the possible emergence of problem banks in the early days of operation.