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Under the guidance of the Cyprus Presidency, European Union’s Economy and Finance Ministers today reached a general approach on proposals aiming at the establishment of a Single Supervisory Mechanism (SSM) for the oversight of credit institutions. The agreement, reached in the early hours of Thursday morning after a 14-hour long extraordinary ECOFIN meeting in Brussels, is regarded as a key part of a broader plan to establish a banking union and will allow the Cyprus Presidency to start trilogue negotiations with the European Parliament, with the aim of approving the texts before the end of the year within the guidelines set out by the European Council.
The ECOFIN Council was chaired by Cyprus’ Minister of Finance, Mr. Vassos Shiarly, and the debate on the Single Supervisory Mechanism (SSM), which has been a top priority for the Cyprus Presidency, was the only issue on agenda.
"This is a great achievement for the Cyprus Presidency. I would like to thank the Ad Hoc working group for their very constructive efforts within strict deadlines," said Mr. Shiarly.
Breaking the vicious cycle
Under the Single Supervisory Mechanism, the European Central Bank (ECB), in coordination with national supervisors, will be responsible for overseeing banking institutions.
“The establishment of the SSM is a necessary precondition, for the European Stability Mechanism to contribute directly to bank recapitalisations, rather than doing so via national treasuries as is currently the case,” said Mr. Shiarly.
“Such a development will enable the vicious circle between banks and sovereigns debts to be broken.”
Within the European Council timeline
On September 12 2012, the Commission proposed the establishment of a Single Supervisory Mechanism for banks led by the ECB. This proposal is a first step towards a fully integrated financial framework, which includes further components such as a single rulebook, common deposit protection and a single bank resolution mechanism.
The proposal involves two regulations: one conferring supervisory tasks on the European Central Bank, the other modifying the regulation establishing the European Banking Authority.
The Ad-Hoc Working Party on the Banking Supervision Mechanism met seven times, while Coreper this week discussed the proposals in a late night session.
The October European Council set 1 January 2013 as the deadline for agreeing on the legal framework set out in the two regulations, whilst indicating that work on operational implementation are expected to take place during 2013.
Nikos Christodoulides
Coreper II
Email: nchristodoulides@mfa.gov.cy
Telephone: +32 27395152
Mobile: +32 473400441
George Sklavos
Ministry of Finance
Email: gsklavos@mof.gov.cy
Telephone: +357 22601268
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