10 July 2013

Commissioner Barnier: Excerpts from the press conference on the Single Resolution Mechanism

Translated from the French

Internal Market and Services Commissioner Michel Barnier said: "We have seen how bank crises can quickly spread across borders, sending confidence into a downward spiral throughout the euro area. We have also seen how the collapse of a major cross-border bank can lead to a complex and confusing situation. We need a system which can deliver decisions quickly and efficiently, avoiding doubts on the impact on public finances, and with rules that create certainty in the market."

"That is the point of today's proposal for a Single Resolution Mechanism: by ensuring that supervision and resolution are aligned on a central level, whilst involving all relevant national players, and backed by an appropriate resolution funding arrangement, it will allow bank crises to be managed more effectively in the banking union and contribute to breaking the link between sovereign crises and ailing banks."

So what is our proposal? We envisage:

• a resolution board to be managed as an agency with the necessary expertise, for which we initially consider 300 people. This board would bring together national resolution authorities, in particular those concerned with the resolution of a transnational bank. The agency will oversee the resolution plans that banks in the eurozone must prepare and when a resolution needs to be implemented, this board will prepare the decisions. It will act upon the alert and request the single supervisor, the ECB. In order to respect the treaty, we envisage a European institution, namely the European Commission, to have the final say on decisions prepared by the board. 
• a common European resolution fund, which is the least the Commission can propose in terms of pooling national private funds in a European fund that will gradually accumulate capacity over the next decade.
• a body of rules from those of the single rulebook and the Directive on Bank Recovery and Resolution.

"Naturally, as we have set up bail-ins, I do not exclude that in the process of resolving crisis banks there might arise the need for public money, particularly during the transition period. The Commission will stick to its role of facilitating the state aid policies and the European Stability Mechanism (ESM) will operate under its agreed rules. The Single Resolution Mechanism cannot impose on a government to use public money against their will.

"We have worked carefully on the legal details of the text. I have had talks with all those finance ministers who wished for it, including Wolfgang Schäuble. I am very attentive to the advice we receive on legal feasability and we have chosen Article 114 of the Treaty as the legal basis, as one of the conditions for the stability of the euro area is the stability of the single market. 

"I do not exclude that we would consider a treaty change to consolidate this system at a later stage. But we have a direct responsibility not to wait: We have identified the problems and can treat them within the current treaty framework."

Full press release (in French)

Proposal

© European Commission