Jointly, they constitute a single resolution system with the ability to intervene directly in banks losses, dividing them among shareholders and creditors. Please note that if we are not going to have a joint SRM, beware that presently not all countries have a national resolution authority and fund: those ones have to set one up very rapidly. In fact, supervisors could face a dilemma.
On the one hand, there may be a danger of contagion and financial market panic. On the other, supporting insolvent banks with central bank liquidity might give rise to “zombies” and weaken the credibility of banking supervision and resolution, and thus the banking union as a whole. Therefore, I strongly support the timeline envisaged for the SRM to start functioning on 1 January 2015.