Skip to main content
SpringerLink
Log in

The Single Resolution Mechanism and the Single Resolution Fund: Substantive Issues and the Contradictory Democratic Deficit

  • Chapter
  • First Online:
Democracy in the EMU in the Aftermath of the Crisis

Abstract

This paper is aimed to examine the Single Resolution Mechanism (SRM) and the Single Resolution Fund (SRF), with particular reference to the effective level of control on their activity and the potential democratic deficit stemming from them. To this end, it first provides a definition of resolution for banks, followed by the examination of why the efficiency of prudential supervision in the Euro area is significantly linked to a centralised system of resolution. Within this ambit, it illustrates that the SRF is financed by contributions from the banking sector which transfer is based on a separate intergovernmental agreement between the Member States of the Euro area. After, it analyses the relationships between the SRM and the European Banking Authority (EBA) and their several implications. Finally, the paper tries to show whether, and to what extent, it is possible to overcome the democratic deficit in the SRM and the SRF and its contradictions.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Altunbas et al. (2011).

  2. 2.

    The European Stability Mechanism and the Fiscal Compact signed, respectively, on 2 February and on 2 March 2012.

  3. 3.

    For example: i) Council Regulation (EU) No. 407/2010 of 11 May 2010 establishing a European financial stabilisation mechanism; ii) the so called Six Pack, that includes: Regulation (EU) No. 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the Euro area, Regulation (EU) No. 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the Euro area, Regulation (EU) No. 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No. 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, Regulation (EU) No. 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances, Council Regulation (EU) No. 1177/2011 of 8 November 2011 amending Regulation (EC) No. 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure and Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States; iii) the so called Two Pack, that includes: Regulation (EU) No. 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the Euro area experiencing or threatened with serious difficulties with respect to their financial stability and Regulation (EU) No. 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the Euro area.

  4. 4.

    The ESFS is a system of micro and macro prudential supervision consisting of European and national supervisors. The micro prudential pillar at EU level includes the European Banking Authority (EBA), the European Insurance and Occupational Pension Authority (EIOPA), the European Securities and Markets Authority (ESMA), which work together in the Joint Committee of the European Supervisory Authorities (ESAs). Macro prudential supervision is performed by the European Systemic Risk Board (ESRB). The national supervisory authorities also take part of the EFSF.

  5. 5.

    Council Regulation (EU) No. 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions.

  6. 6.

    Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No. 1093/2010.

  7. 7.

    Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) No. 806/2014 in order to establish a European Deposit Insurance Scheme, COM (2015) 586 final.

  8. 8.

    Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU; Regulation (EU) No. 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision 716/2009/EC and repealing Commission Decision 2009/78/EC. See Babis (2014).

  9. 9.

    Article 31, para. 2, of Directive 2014/59/EU. See Schillig (2013).

  10. 10.

    Article 33 of Directive 2014/59/EU.

  11. 11.

    Article 37, para. 3, of Directive 2014/59/EU. See Schillig (2014).

  12. 12.

    Article 38 of Directive 2014/59/EU. See Schillig (2015).

  13. 13.

    Article 40, para. 2, of Directive 2014/59/EU. See Schillig (2015).

  14. 14.

    Article 42 of Directive 2014/59/EU. See Schillig (2015) and Wellerdt (2015).

  15. 15.

    Moloney (2014).

  16. 16.

    Boccuzzi (2015), Forestieri (2014), Huertas (2013) and Schillig (2015).

  17. 17.

    Article 43, para. 2, of Directive 2014/59/EU.

  18. 18.

    Kokkinis (2015).

  19. 19.

    Huertas (2016).

  20. 20.

    Véron and Wolff (2013).

  21. 21.

    Allen and Carletti (2015).

  22. 22.

    Avgouleas (2012).

  23. 23.

    Tressel (2014).

  24. 24.

    See recital 12 of Regulation (EU) No. 806/2014; Gallagher (2014). On the internal market, its establishment and completion, see Daniele (2012).

  25. 25.

    Recital 19 of Regulation (EU) No. 806/2014.

  26. 26.

    Maletić (2013).

  27. 27.

    Article 69, paras. 1, 3 and 4, of Regulation (EU) No. 806/2014.

  28. 28.

    Ibid., Article 71, para. 1.

  29. 29.

    Ibid., Article 76.

  30. 30.

    Ibid., Articles 42–56.

  31. 31.

    Hadjiemmanuil (2015).

  32. 32.

    Articles 1 and 77 of Regulation (EU) No. 806/2014.

  33. 33.

    Article 1, para. 2, of the Agreement on the Transfer and Mutualisation of Contributions to the Single Resolution Fund (SRF IGA), signed on 14 May 2014.

  34. 34.

    Zavvos and Kaltsouni (2015).

  35. 35.

    Barents (2004).

  36. 36.

    van Rossem (2013).

  37. 37.

    See para. 1.

  38. 38.

    De Schoutheete (2011).

  39. 39.

    Ponzano (2011).

  40. 40.

    Ponzano (2011).

  41. 41.

    Zavvos and Kaltsouni (2015).

  42. 42.

    Supra, para. 1.

  43. 43.

    Supra, para. 2.

  44. 44.

    De Meester (2014).

  45. 45.

    Magiera and Weiß (2014).

  46. 46.

    Wellerdt (2015).

  47. 47.

    Davies (2015).

  48. 48.

    Article 127 of Directive 2014/59/EU.

  49. 49.

    Supra, para. 1.

  50. 50.

    It was created as a temporary crisis resolution mechanism in the form of a company incorporated in Luxembourg under Luxembourgish law on 7 June 2010. Its shareholders are EMU Member States with the exception of Latvia and Lithuania.

  51. 51.

    Supra, para 1.

  52. 52.

    Article 30, para. 7, of Regulation (EU) No. 806/2014.

  53. 53.

    Dorn (2015).

  54. 54.

    Dorn (2015).

  55. 55.

    Interinstitutional agreement between the European Parliament and the Single Resolution Board on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the Single Resolution Board within the framework of the Single Resolution Mechanism, signed on 16 December 2015.

  56. 56.

    Craig (2015).

  57. 57.

    Crum and Curtin (2015).

  58. 58.

    Villani (2016).

References

  • Allen F, Carletti E (2015) Systemic risk and macroprudential regulation. In: Micklitz HM, Tridimas T (eds) Risk and EU law. Elgar Publishing, Cheltenham-Northampton

    Google Scholar 

  • Altunbas Y et al (2011) Bank risk during the financial crisis. Do business models matter? ECB Working Papers, No. 1394

    Google Scholar 

  • Avgouleas E (2012) Governance of global financial markets. The law, the economics, the politics. Cambridge University Press, Cambridge

    Google Scholar 

  • Babis VSG (2014) European bank recovery and resolution directive: recovery proceedings for cross-border banking groups. Eur Bus Law Rev (3):459–480

    Google Scholar 

  • Barents R (2004) The autonomy of community law. Kluwer Law International, The Hague-London-New York

    Google Scholar 

  • Boccuzzi G (2015) La gestione delle crisi bancarie nel quadro dell’Unione bancaria europea. Bancaria (2):2–11

    Google Scholar 

  • Craig P (2015) Accountability. In: Arnull A, Chalmers D (eds) The Oxford handbook of European Union law. Oxford University Press, Oxford

    Google Scholar 

  • Crum B, Curtin D (2015) The challenge of making European Union executive power accountable. In: Piattoni S (ed) The European Union: democratic principles and institutional architectures in times of crisis. Oxford University Press, Oxford

    Google Scholar 

  • Daniele L (2012) Diritto del mercato unico europeo. II edn. Giuffrè, Milano

    Google Scholar 

  • Davies P (2015) Resolution of cross-border groups. In: Haentjens M, Wessels B (eds) Researching handbook on crisis management in the banking sector. Elgar Publishing, Cheltenham-Northampton

    Google Scholar 

  • De Meester B (2014) Liberalization of trade in banking services. An international and European perspective. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • De Schoutheete P (2011) Decision-making in the Union. Notre Europe Policy Brief, No. 24

    Google Scholar 

  • Dorn N (2015) Democracy and diversity in financial market regulation. Routledge, New York

    Google Scholar 

  • Forestieri G (2014) L’Unione bancaria europea e l’impatto sulle banche. Banca Impresa Società (3):489–504

    Google Scholar 

  • Gallagher P (2014) The financial crisis, banking union and the rule of law. In: Bradley K et al (eds) Of courts and constitutions. Liber amicorum in Honour of Nial Fennely. Hart Publishing, Oxford-Portland

    Google Scholar 

  • Hadjiemmanuil C (2015) Bank resolution financing in the Banking Union. LSE Law, Society and Economy Working Papers, No. 6

    Google Scholar 

  • Huertas TF (2013) The case for bail-ins. In: Dombret A, Kenadijan PS (eds) The bank recovery and resolution directive: Europe’s solution for “Too Big To Fail?”. de Gruyter, Berlin-Boston

    Google Scholar 

  • Huertas TF (2016) Banking Union. The way forward. In: Castañeda JE et al (eds) European Banking Union. Prospects and challenges. Routledge, New York

    Google Scholar 

  • Kokkinis A (2015) A primer on corporate governance in banks and financial institutions: are banks special? In: Chiu I, McKee M (eds) The law on corporate governance in banks. Elgar Publishing, Cheltenham-Northampton

    Google Scholar 

  • Magiera S, Weiß W (2014) Alternative dispute resolution mechanisms in the European Union law. In: Dragos D, Neamtu B (eds) Alternative dispute resolution in European administrative law. Springer, Heidelberg-New York-Dordrecht-London

    Google Scholar 

  • Maletić I (2013) The law and policy of harmonisation in Europe’s internal market. Elgar Publishing, Cheltenham-Northampton

    Book  Google Scholar 

  • Moloney N (2014) EU securities and financial markets regulation, 3rd edn. Oxford University Press, Oxford

    Google Scholar 

  • Ponzano P (2011) Community and intergovernmental method: an irrelevant debate? Notre Europe Policy Brief, No. 23

    Google Scholar 

  • Schillig M (2013) Bank resolution regimes in Europe-Part I: recovery and resolution planning, early intervention. Eur Bus Law Rev (6):751–779

    Google Scholar 

  • Schillig M (2014) Bank resolution regimes in Europe-Part II: resolution tools and powers. Eur Bus Law Rev (6):67–102

    Google Scholar 

  • Schillig M (2015) The EU resolution toolbox. In: Haentjens M, Wessels B (eds) Researching handbook on crisis management in the banking sector. Elgar Publishing, Cheltenham-Northampton

    Google Scholar 

  • Tressel T (2014) Banking Union and single market: consistent setup and risk mitigation. In: Enoch C et al (eds) From fragmentation to financial integration in Europe. International Monetary Fund, Washington

    Google Scholar 

  • van Rossem JW (2013) The autonomy of EU law. In: Wessel RA, Blockmans S (eds) Between autonomy and dependence: the EU legal order under the influence of international organisations. T.M.C. Asser Press, The Hague

    Google Scholar 

  • Véron N, Wolff GB (2013) From supervision to resolution: next steps on the road to European Banking Union. Bruegel Policy Contribution, No. 4

    Google Scholar 

  • Villani U (2016) Istituzioni di Diritto dell’Unione europea, IV edn. Cacucci, Bari

    Google Scholar 

  • Wellerdt A (2015) Organisation of banking regulation. Springer, Heidelberg-New York-Dordrecht-London

    Book  Google Scholar 

  • Zavvos GS, Kaltsouni S (2015) The single resolution mechanism in the European Banking Union: legal foundation, governance structure and financing. In: Haentjens M, Wessels B (eds) Researching handbook on crisis management in the banking sector. Elgar Publishing, Cheltenham-Northampton

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Polytechnic of Bari, Bari, Italy

    Nicola Ruccia

Authors
  1. Nicola Ruccia
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Nicola Ruccia .

Editor information

Editors and Affiliations

  1. Department of Public Law, University of Rome "Tor Vergata", Rome, Italy

    Luigi Daniele

  2. Department of Public Law, University of Rome "Tor Vergata", Rome, Italy

    Pierluigi Simone

  3. Italian Ministry of Foreign Affairs and International Cooperation, Rome, Italy

    Roberto Cisotta

Rights and permissions

Reprints and permissions

Copyright information

© 2017 Springer International Publishing AG and G. Giappichelli Editore

About this chapter

Cite this chapter

Ruccia, N. (2017). The Single Resolution Mechanism and the Single Resolution Fund: Substantive Issues and the Contradictory Democratic Deficit. In: Daniele, L., Simone, P., Cisotta, R. (eds) Democracy in the EMU in the Aftermath of the Crisis. Springer, Cham. https://doi.org/10.1007/978-3-319-53895-2_17

Download citation

  • DOI: https://doi.org/10.1007/978-3-319-53895-2_17

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-53894-5

  • Online ISBN: 978-3-319-53895-2

  • eBook Packages: Law and CriminologyLaw and Criminology (R0)

Publish with us

Policies and ethics

Search

Navigation