The European Central Bank (ECB) Under the Single Supervisory Mechanism (SSM): Its Functioning and Its Limits

Abstract

As part of the Eurozone-project ‘Banking Union’, the European Central Bank (ECB) was vested with a large pouvoir in the field of banking supervision. Such an empowerment of the ECB is principally provided for in Article 127 (6) TFEU, on which basis the SSM Regulation was therefore adopted. However, this provision allows for the delegation upon the ECB of ‘specific [supervisory] tasks’ only. In order to avoid a conflict with the ECB’s monetary policy function, a new (internal) body of the ECB, the Supervisory Board, was established, which is essentially dealing with the ECB’s supervisory tasks. Its supervisory draft decisions come into effect if the Governing Council of the ECB does not object to them (reverse majority voting). Within the broader framework of the SSM, the supervisory branch of the ECB and, under the latter’s guidance, the national supervisory authorities together perform banking supervision in the Eurozone. The means the ECB has at its hand in order to determine national supervision are without precedent in the long history of the European Verwaltungsverbund, of European Union-Member States administrative cooperation that is. This paper addresses the functioning and the limits of the SSM with a view to answering the following three questions: How does administrative cooperation work within and with the supervisory authorities outside the SSM, for example the European Banking Authority (EBA)? Is the delegation of banking supervisory powers upon the ECB, as effected by the SSM Regulation, in accordance with Article 127 (6) TFEU and the Meroni-criteria, which were recently re-considered by the Court? Is the reverse majority voting to be applied in the Governing Council of the ECB when deciding upon a draft of the Supervisory Board in compliance with the ECB’s decision-making rules as laid down in the Statute of the ESCB/ECB, for example primary law?