Both are indispensable for aligning the supervisory responsibilities with those for the management and resolution of crises, and for breaking the perverse feedback loop between banks and sovereigns. In July the European Commission proposed a regulation to introduce a single banking resolution authority, drawing on common financial resources.
A directive on the constitution of a European network of national deposit guarantee schemes has also been under discussion for some time. The ECB will soon undertake a comprehensive assessment of banks’ conditions prior to the launch of the single supervisory mechanism. This will be followed by an assessment of the risk profile of all the intermediaries which will be subject to centralized supervision.