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2017 | OriginalPaper | Chapter

The Single Resolution Mechanism and the Single Resolution Fund: Substantive Issues and the Contradictory Democratic Deficit

Author : Nicola Ruccia

Published in: Democracy in the EMU in the Aftermath of the Crisis

Publisher: Springer International Publishing

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Abstract

This paper is aimed to examine the Single Resolution Mechanism (SRM) and the Single Resolution Fund (SRF), with particular reference to the effective level of control on their activity and the potential democratic deficit stemming from them. To this end, it first provides a definition of resolution for banks, followed by the examination of why the efficiency of prudential supervision in the Euro area is significantly linked to a centralised system of resolution. Within this ambit, it illustrates that the SRF is financed by contributions from the banking sector which transfer is based on a separate intergovernmental agreement between the Member States of the Euro area. After, it analyses the relationships between the SRM and the European Banking Authority (EBA) and their several implications. Finally, the paper tries to show whether, and to what extent, it is possible to overcome the democratic deficit in the SRM and the SRF and its contradictions.

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Altunbas et al. (2011).

The European Stability Mechanism and the Fiscal Compact signed, respectively, on 2 February and on 2 March 2012.

For example: i) Council Regulation (EU) No. 407/2010 of 11 May 2010 establishing a European financial stabilisation mechanism; ii) the so called Six Pack, that includes: Regulation (EU) No. 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the Euro area, Regulation (EU) No. 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the Euro area, Regulation (EU) No. 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No. 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, Regulation (EU) No. 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances, Council Regulation (EU) No. 1177/2011 of 8 November 2011 amending Regulation (EC) No. 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure and Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States; iii) the so called Two Pack, that includes: Regulation (EU) No. 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the Euro area experiencing or threatened with serious difficulties with respect to their financial stability and Regulation (EU) No. 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the Euro area.

The ESFS is a system of micro and macro prudential supervision consisting of European and national supervisors. The micro prudential pillar at EU level includes the European Banking Authority (EBA), the European Insurance and Occupational Pension Authority (EIOPA), the European Securities and Markets Authority (ESMA), which work together in the Joint Committee of the European Supervisory Authorities (ESAs). Macro prudential supervision is performed by the European Systemic Risk Board (ESRB). The national supervisory authorities also take part of the EFSF.

Council Regulation (EU) No. 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.

Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No. 1093/2010.

Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No. 806/2014 in order to establish a European Deposit Insurance Scheme, COM (2015) 586 final.

Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU; Regulation (EU) No. 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision 716/2009/EC and repealing Commission Decision 2009/78/EC. See Babis (2014).

Article 31, para. 2, of Directive 2014/59/EU. See Schillig (2013).

Article 33 of Directive 2014/59/EU.

Article 37, para. 3, of Directive 2014/59/EU. See Schillig (2014).

Article 38 of Directive 2014/59/EU. See Schillig (2015).

Article 40, para. 2, of Directive 2014/59/EU. See Schillig (2015).

Article 42 of Directive 2014/59/EU. See Schillig (2015) and Wellerdt (2015).

Moloney (2014).

Boccuzzi (2015), Forestieri (2014), Huertas (2013) and Schillig (2015).

Article 43, para. 2, of Directive 2014/59/EU.

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See recital 12 of Regulation (EU) No. 806/2014; Gallagher (2014). On the internal market, its establishment and completion, see Daniele (2012).

Recital 19 of Regulation (EU) No. 806/2014.

Maletić (2013).

Article 69, paras. 1, 3 and 4, of Regulation (EU) No. 806/2014.

Ibid., Article 71, para. 1.

Ibid., Article 76.

Ibid., Articles 42–56.

Hadjiemmanuil (2015).

Articles 1 and 77 of Regulation (EU) No. 806/2014.

Article 1, para. 2, of the Agreement on the Transfer and Mutualisation of Contributions to the Single Resolution Fund (SRF IGA), signed on 14 May 2014.

Zavvos and Kaltsouni (2015).

Barents (2004).

van Rossem (2013).

See para. 1.

De Schoutheete (2011).

Ponzano (2011).

Zavvos and Kaltsouni (2015).

Supra, para. 1.

Supra, para. 2.

De Meester (2014).

Magiera and Weiß (2014).

Wellerdt (2015).

Davies (2015).

Article 127 of Directive 2014/59/EU.

Supra, para. 1.

It was created as a temporary crisis resolution mechanism in the form of a company incorporated in Luxembourg under Luxembourgish law on 7 June 2010. Its shareholders are EMU Member States with the exception of Latvia and Lithuania.

Supra, para 1.

Article 30, para. 7, of Regulation (EU) No. 806/2014.

Dorn (2015).

Interinstitutional agreement between the European Parliament and the Single Resolution Board on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the Single Resolution Board within the framework of the Single Resolution Mechanism, signed on 16 December 2015.

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Crum and Curtin (2015).

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Title: The Single Resolution Mechanism and the Single Resolution Fund: Substantive Issues and the Contradictory Democratic Deficit
Author: Nicola Ruccia
Publisher: Springer International Publishing
Book: Democracy in the EMU in the Aftermath of the Crisis
Print ISBN: 978-3-319-53894-5

Electronic ISBN: 978-3-319-53895-2

Copyright Year: 2017
DOI: https://doi.org/10.1007/978-3-319-53895-2_17

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