The ECBs macroprudential tasks and home-host supervision in the SSM: tasks, powers and supervisory gaps

Abstract

The Single Supervisory Mechanism (SSM) was designed to enhance supervision of the European banking sector and to promote European banking stability following the financial crisis of 2007–2009 and the euro area sovereign debt crisis of 2010–2012. The SSM provides the supervisory pillar of the European Banking Union (EBU) and empowers the European Central Bank (ECB) to carry out prudential supervision of credit institutions, financial holding companies and mixed financial holding companies that are established in participating Member States and to allocate supervisory responsibilities to the national competent authorities (NCAs) of participating Member States to supervise less significant institutions.2 The SSM raises important legal and institutional issues regarding the extent and scope of the ECB’s competence to supervise credit institutions and banking groups, especially on a cross-border basis, and whether or not its powers and capabilities are adequate to achieve prudential regulatory objectives. This chapter first analyses the ECB’s legal competences to exercise macroprudential supervisory tasks involving the supervision of credit institutions on a home–host country basis within the EBU. Second, the chapter will analyse the applicable provisions of the Single Supervisory Mechanism Regulation3 (SSM