Markets also need to be confident that, in the future, the supervisor can “pull the trigger” on banks that are failing or likely to fail. This means that there must be a mechanism that can wind down banks without causing financial instability. And this is why the SRM is also an essential element of Banking Union.
BIS central bankers’ speeches  1  In our view, the SRM should comprise of a European resolution authority backed by a single resolution fund. The rationale for this mainly concerns dealing with large, cross-border banks. For resolving these institutions, a central authority that can make swift, impartial decisions is key.