Principles For the SSM to work, a union body must be vested with ultimate supervisory authority over all EU banks ECB cannot be this body unless all MS join the Euro (because non-EZ MS can only be invited to join and since they are not represented in Governing Council there is little incentive) Its statutes mean it must give monetary policy priority over supervisory policy Ultimate solution = Use 352+114 TFEU to create a body (EBA or a separate entity) that has these powers Immediate solution = reinforce EBA to ensure that : ECB and other NSAs are equally subject to final say by EBA concerning application of prudential legislation EBA can address binding instructions equally to all NSAs and ECB (Ripasi interp. of TFEU) Adapt decision making in EBA to prevent the ECB mechanism Systematically dominating non-ECB MS Diminishing rights of “opt-ins” Enhance EBA’s powers to enforce compliance with information requests and other decisions are reinforced (reflecting EP position from 2010)

EBA as Supreme Supervisory Authority +Enhanced powers. Decision Making EBA Board of Supervisors 27 NCA with separate votes Binding Instructions Binding Instructions Extra Panel for ECB-mechanism Members (to boost voice of “opt-ins”) Planning & Execution Only Permanent College – enhance uniformity of supervision ECB Supervisory board Non-ECB NSAs Fully harmonised execution Individial NSAs = agents of ECB Red = proposed changes

Explanations Enhanced powers of EBA Binding instructions Full investigatory powers over institutions & supervisors Issuing Single Supervisory Handbook (Enria) Direct intervention in case of non-compliance + EP position on EBA 2009 Binding instructions ECB (non-)action can be corrected by binding EBA decision (no independence for supervisory tasks) Just as in the case of National Supervisory Auths. (NSA) Special Panel for ECB comp. auths. Possibility of challenging (via EBA) ECB decision affecting an “opt-in” Means that ECB decision (based on power of Gov. Council with no “opt-ins”) can be overruled by EBA decision (proposed by panel including “opt-ins”) Changed EBA voting system for Binding Mediation “3+3” only where a dispute is between ECB and non-ECB Simple majority otherwise

Detail on proposed Voting Mechanisms