The Single Supervisory Mechanism and the Assessment of Hungary’s Possible Approach
Abstract: Due to the European financial and sovereign debt crisis occurred in 2008, the decision-makers of the European Union decided to take steps to avoid a further possible turmoil and created a mechanism to ensure the efficiency of financial supervision across the union. This financial integration of Europe is called the banking union. The milestones of the union are: the single rulebook for the capital requirements of credit institutions (i.), the Single Supervisory Mechanism (SSM) lifting prudential supervision of credit institutions to a European level (ii.), a Single Resolution Mechanism (SRM) (iii.) and the common deposit insurance system (iv.). The Single Supervisory Mechanism is one of the crucial parts of the banking union, since it has the task to extend the European integration to the field of financial supervision. The executer of this task shall be the European Central Bank, so in the future the ECB will be responsible for both, the monetary policy of the union and the financial supervision of the significant European credit institutions. The ECB – with the contribution of the national competent authorities – shall supervise the most significant banks of the European Union. The SSM will be mandatory for the Euro-zone Member States and voluntary for the rest. However, it is unclear whether how many non-euro zone Member State will decide to participate. According to the Hungarian situation, it is unlikely that Hungary likely participates, because of the uncertainty regarding the untested practice of the SSM.
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