The first policy realm relates to policies aimed at the financial sector. Governments and financial sector authorities need to further encourage the repair of banks’ balance sheets. Banks in the euro area finance the backbone of our economic system: households and small and medium-sized companies. The decision to establish a European Single Supervisory Mechanism (SSM) is an essential institutional step overseeing such a process.
The SSM will contribute to greater financial integration, a level playing field and greater financial stability. It should be complemented by a unified European framework for bank resolution and recovery, and with a Single Resolution Mechanism with the authority to wind up banks in a timely and impartial manner.