The establishment of the SSM is essential for the functioning of Monetary Union. The independent supranational supervision by the SSM will help to restore confidence in the banking sector. This should reverse the trend towards financial fragmentation, prevent flows of deposits due to the lack of confidence, and help restart a well-functioning interbank market.
It is also a major step for the single financial market. The SSM will simplify supervision and support the development of a single rulebook by the European Banking Authority, while helping to better address systemic risks in Europe. The Single Supervisory Mechanism, although very important, is only the first step towards a banking union.