FX.co ★ European lawmakers greenlight SSM

Europe’s countries have arrived at a common view and adjusted all articles of the agreement on establishing the single bank supervisory authority in the eurozone. Summarizing the voting results, European lawmakers voted overwhelmingly in favor of creating the single supervisor mechanism (SSM) for European Union banks. In a year’s time, since autumn 2014, these powers will be assigned to the European Central Bank. This has become possible after the long and painstaking negotiations with the European Commission. The parties were not able to reach a consensus on the main issues for months; however, eventually MEPs struck a deal with the European Central Bank that would give them greater oversight of the agency’s decision making. Nearly 130 of the EU's largest banks will be brought under the direct supervision of the ECB. The necessity of founding such a supervising authority was aroused by the modern reality; it is considered as the key point of the future banking union treaty. It will help the 17 EU countries withstand feasible financial disturbances; besides, ailing banks will be able to rely on receiving capital injections directly from the European Stability Mechanism, the eurozone's permanent bailout fund. However, it is supposed to adopt a decision on one of the most complicated points: a bankruptcy procedure of weak banks and reserving sole guarantees on retail deposits safety in EU banks. “Taxpayers have to be shielded from bank failures. The eurozone’s countries have to restore financial markets’ confidence step by step. Our work has still been going on. We should draw the lesson from the financial crisis that is not over yet,” Michel Barnier, European Commissioner for the internal market told journalists. In his eyes, these issues have been “the most essential since the moment of launching the common European currency”.