The European Commission proposed a Single Resolution Mechanism (SRM) for the banking union. The mechanism would complement the Single Supervisory Mechanism. Under the Single Supervisory Mechanism, the ECB will directly supervise banks mostly in the euro area.  The SRM should ensure that if a bank subject to the SSM faced difficulties, its resolution could be managed on the European level to ensure complex and effective resolution.

The main elements of the Single Resolution Mechanism are:

-          A Single Resolution Board, which would consist of representatives from the ECB, the EC and the relevant national authorities

-          Close cooperation of the ECB and the Single Resolution Board in identifying the troubled banks

-          Involvement of both the European and national authorities in overseeing the resolution

-          A Single Bank Resolution Fund would be set up to ensure the availability of funding support during the bank´s restructuring.

The EC´s proposal came only a few days after the Council of the Ministers of Finance and Economic Affairs agreed on a general approach on the rules of bank recovery and resolution on 27 June. Negotiations between the council and the European Parliament should start in the coming days and the final agreement is expected to be reached this autumn and it could be applied from January 2015.

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