BRUSSELS (MNI) – The following is the fifth part of a text
published by the European Commission, which answers a number of
questions regarding its proposal for a centralised Eurozone banking

How would non-euro area countries be able to join the single supervisory

Under the Treaty, the ECB cannot exercise binding powers outside
the euro area. Therefore, non-euro area Member States cannot be fully
part of the single supervisory mechanism. Nevertheless, non-euro area
countries may notify the ECB of their intention to join the SSM by
establishing close cooperation between their competent authorities and
the ECB. To that purpose, they will have to take all necessary measures
to ensure that their national competent authorities will abide by and
implement relevant ECB acts. Where all the conditions for establishing
close cooperation are met, the ECB would be obliged to take a decision
to establish such close cooperation, allowing the non-euro area country
to take part in deliberations in the supervisory board, which would
thereby gain access to all information available within the SSM.

The ECB may decide to terminate the close cooperation if the
conditions are no longer met.

What about the European Banking Authority? Does today’s proposal mean
that EBA was not credible or strong enough?

The European Banking Authority (EBA) and the European System of
Financial Supervision established in 2011 have significantly improved
cooperation between banking supervisors within the Union. The EBA is
making important contributions to the creation of a single rulebook for
financial services in the Union, and has played a crucial role in
implementing in a consistent way the recapitalisation of major credit
institutions of the Union as agreed by the informal Meeting of Members
of the European Council in October 20112. It is responsible for the
EU-wide stress test exercises to assess the resilience of financial
institutions to adverse market developments, as well as to contribute to
the overall assessment of systemic risk in the EU financial system.
However, day-to-day supervision has remained at national level.

The ECB will carry out supervisory tasks which are currently
carried out by national supervisors in the Euro area, not by the EBA.
The ECB will cooperate with the EBA within the framework of the European
System of Financial Supervision. The role of EBA will be preserved. It
will continue developing the single rulebook applicable to all 27 Member
States and enhance convergence of supervisory practices across the whole
Union. The Commission also asks today that the EBA develops a Single
Supervisory Handbook to complement the EU’s single rulebook and ensure
consistency in bank supervision across the 27 countries in the single

How would the ECB interact with EBA?

The new European Supervisory Authorities – the European Banking
Authority (EBA), the European Securities and Markets Authority (ESMA),
and the European Insurance and Occupational Pensions Authority (EIOPA) –
will all retain existing powers and tasks.

In particular they will continue to contribute to the creation of a
single rulebook and to establishing a level playing-field in the single

The proposed amendments to the EBA Regulation will ensure that the
EBA can continue to fulfil its mission effectively as regards all Member
States. In particular, the EBA is enabled to exercise its powers and
tasks not only vis–vis national supervisors but also vis–vis the ECB
as a European institution.

In order to ensure consistency with the framework of the European
System of Financial Supervision (ESFS) set up in 2010 (MEMO/09/404), the
ECB will coordinate and express a common position of the Euro area
Member States for matters falling under its supervisory tasks when they
participate in the Board of Supervisors and the Management Board of the
EBA. However in order to ensure EBA decision-making structures continue
to be balanced and effective and preserve the interests of all its
members, the amendments to the EBA Regulation will adapt voting
arrangements within the EBA, allowing the EBA to continue fulfilling its
mission in an optimal way.

Furthermore, the effective impact of the SSM on the operational
functioning of ESFS will be specifically examined in the forthcoming
review on the functioning of the ESAs to be presented by the Commission
at the beginning of 2014.

How will the voting modalities under the EBA regulation be modified
(decisions subject to qualified majority/ simple majority)?

Within the EBA, today as a matter of principle decisions are taken
by simple majority (one member, one vote) by the members of the EBA’s
Board of Supervisors. As regards binding EBA powers, this includes
decisions on the application of EU law in the context of the breach of
law procedure, action in emergency situations and settlement of
disagreements between national authorities (in the latter case subject
to a specific voting procedure in certain cases). On the other hand,
decisions in relation to the adoption of guidelines and recommendations
and of draft technical standards as well as on budgetary matters are
taken by qualified majority (as defined in Article 16 (4) TEU and in
Article 3 of the Protocol (No 36) on transitional provisions based on
the rules applicable in the Council.

Today, supervisors of euro area Member States – if they all cast
their votes in the same way – have a simple majority but do not have a
qualified majority of the votes in EBA’s Board of Supervisors.

In order to ensure EBA decision-making structures continue to be
balanced and effective and preserve the interests of all its members,
voting arrangements within the EBA on breach of law and settlement of
disagreement would be adapted.

When decisions are taken in relation to a breach of law or in
relation to binding mediation, an independent panel will be set up to
prepare the relevant decisions, consisting of the Chairperson and one
representative from each a participating and a non-participating Member
State to the SSM. These decisions are to be considered as adopted unless
they are rejected by a simple majority which shall include at least
three votes from each of the participating and the non-participating
Member States to the SSM. Under a scenario where only four or less
Member States are not participating in the SSM, the simple majority is
met as long as at least one vote of a non-participating Member State is

It is not proposed to adapt the voting modalities on matters
subject to qualified majority voting and on action in emergency
situations. In those cases, the existing rules provide sufficient
safeguards to ensure balanced and effective decision-making, taking into
account the interests of the internal market as a whole. For example,
draft technical standards are subject to qualified majority voting in
the Board of Supervisors and are ultimately adopted by the Commission
which can amend them in particular to protect the internal market.

Today’s proposal does not propose to amend the composition of the
Board of the EBA, which deals with matters both related to the future
activities of the SSM and other matters. Of course, the ECB will
coordinate the positions of the Euro area Member States when they
participate in the board of the EBA.

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