A critical analysis of the impact on European banking supervision as a result of the implementation of the single supervisory mechanism

Abstract

This dissertation investigates the reverberating wave of new, comprehensive financial regulation intended to repair consumer confidence in the European Union, as triggered by the 2007-2008 sovereign-debt financial crisis, the effects of this crisis are still being felt today. This study is a critical analysis of how and to what degree the banking supervisory regime developed the aim of which is to shape the financial world for many years to come. This study also looks at whether this supervisory framework is capable of meeting the various needs within the European Banking Union. In this respect, European credit institutions are required to contend with an avalanche of supervisory requirements emphasising maximum harmonisation of EU banking supervision. This thesis examines the influence of the Single Supervisory Mechanism (SSM) on financial stability as being fairly ambiguous. Whereas the single rulebook aims at providing a number of benefits, the recent financial turmoil demonstrated how the significance of potential systemic risk may impact on the wider financial system. Accordingly, the SSM was implemented with the aim of establishing a homogenous and consistent supervisory framework across the EU, by empowering the ECB to take up a number of developments. Reference is also being made as to how the increased regulation has been challenging the ability of credit institutions and that the current system which is expected to bring with it new supervisory challenges. Finally, whilst acknowledging the limitations of the study, the findings tentatively show that the SSM is expected to bring about a shift in the supervisory framework and an overall positive impact on the banking industry since this will further enhance Europe’s reputation