With a common set of rules on microprudential regulation, a European supervisor will be best placed to ensure a common supervisory practice. This is to avoid forbearance or a policy of “too little too late”. Inaction  BIS central bankers’ speeches  3  can lead to severe problems in financial institutions and contagion in the financial system.
Moreover, a European supervisor helps to preserve a level playing field, which is essential to the single market. However, as envisaged by the banking union, a common resolution scheme should soon complement a single banking supervisor. First of all, it will ensure that owners and creditors bear the risk of their investment.