On 14 July, the Council definitively adopted the Single Resolution Mechanism regulation. The formal adoption was made unusually at a meeting of the Agriculture and Fisheries Council. However, the agreement among Member States and between the Council and the European Parliament was already made in April. The regulation establishes the Single Resolution Mechanism, a core institute of the banking union, together with the Single Supervisory Mechanism. The SRM provides guidelines for the resolution of failing banks in the euro-area and in states that decide to participate. The mechanism consists of a Board and of a Fund. The Board will consist of a chair-person and four full-time members, along with representatives of the regulators of all participating Member States, together with a representative of the ECB and of the Commission. The Board, upon notification by the ECB that a bank is about to fail, will decide on a resolution scheme for the bank. Responsibilities of the Board and of national regulators will differ depending on the importance of the failing bank. The Fund will be used to finance the resolution schemes of failing banks. Its target capacity is of 1% of the banking sector´s covered deposits. The funding of the fund and mutualisation of the Member States´ contributions is governed by a separate Inter-Governmental Agreement, which was already signed. The planning provisions of the regulation will apply from 1 January 2015, the practical provisions from 1 January 2016.

For more, click here.