Michael McGrath
Question:168. Deputy Michael McGrath asked the Minister for Finance the progress to date in implementing a Europe wide system of bank supervision; and if he will make a statement on the matter. [32674/14]
View answerThursday, 17 July 2014
Questions (168)
Written answers
Considerable progress has been made over the past few years to put in place a Europe wide system of bank supervision. In the first instance a harmonised set of EU rules on capital requirements for credit institutions and investment firms was agreed early last year. These rules apply to all 28 EU Member States and were transposed into Irish law earlier this year. The rules set stronger prudential requirements for banks, requiring them to keep sufficient capital reserves and liquidity. They aim to strengthen the effectiveness of the regulation of credit institutions and investment firms in the EU and enhance financial stability. A further objective is to contain the pro-cyclicality of the financial system which in turn will ensure a high level of protection for investors and depositors and will benefit of the operators in these markets.
These rules are an important part of the Single Rulebook which is the foundation of the banking union. The Single Rulebook consists of a set of legislative texts which all financial institutions in the EU must comply with. The Single Rulebook also contains improved rules on depositor protection and rules for managing failing banks.
In addition to this Single Rulebook the Deputy will recall that further integration of the banking system was considered necessary for Member States within the currency union and on this basis Eurozone Member States agreed to the creation of a banking union. In a supervision context the banking union will include a Single Supervisory Mechanism (SSM) which creates a new system of financial supervision comprising of the ECB and national supervisory authorities of the participating Member States. Under this new system of supervision the ECB will directly supervise significant credit institutions and will work closely with national supervisors to supervise other credit institutions under the general oversight of the ECB.
With regard to implementation of this common system of supervision, the ECB will take over its supervisory responsibilities on 4 November of this year. I understand that ECB's preparations for this are well under way at this stage. Ms Danielle Nouy was appointed Chair of the Supervisory Board of the SSM in December 2013. Ms Sabine Lautenschlager was appointed Vice-Chair in February of this year and a further three appointments to the Board were made in March. The ECB recently confirmed that it has largely completed the establishment of the SSM governance structures. The Supervisory Board adopted its Rules of Procedure on 31 March 2014 and they entered into force on 1 April 2014.
In relation to staffing of the SSM I understand this is proceeding and is taking place in a top-down fashion. The SSM has also confirmed that preparatory work is well advanced in areas such as IT infrastructure, HR and legal services.
In April of this year the ECB published its framework regulation which lays down the main procedures governing cooperation between the ECB and national supervisors.
Furthermore, the Deputy will be aware that the ECB is performing a comprehensive assessment of the banks balance sheets, including an asset quality review and a stress test, prior to it assuming full responsibility under the SSM in November. I understand this process is on track and final results should be published by the end of October.
In summary the process of putting in place a European system of banking supervision is well underway. It is expected that the momentum behind this project will continue at a steady pace over the next few months with a view to the SSM being fully operational by November of this year.
Question No. 169 answered with Question No. 74.
Question No. 170 answered with Question No. 128.