The European Central Bank (ECB) has now assumed responsibility for banks in the euro area.
This follows a year-long preparatory phase during which the resilience and balance sheets of the biggest banks in the euro area were examined during a ‘stress-testing’ exercise.
The Single Supervisory Mechanism (SSM) is a new system of banking supervision comprising the ECB and national authorities of participating countries. Its main aims are to ensure consistent supervision and to contribute to the safety and soundness of credit institutions and the stability of the European financial system.
Under the new arrangements, the ECB will directly supervise 120 significant banking groups, representing 82% (by assets) of the euro-area banking sector.
For the other 3,500 banks, the ECB will set and monitor the supervisory standards and work with national authorities to monitor their supervision.
Sabine Lautenschläger, vice chair of the supervisory board of the ECB, said: “European-level banking supervision will improve and strengthen financial stability, ensuring a level playing field in the supervisory requirements to be met by banks.”