On 5 March 2014, the Committee on Economic and Monetary Affairs (ECON) of the EU Parliament published a press release regarding its “final offer” on the Single Resolution Mechanism (SRM).
ECON noted that negotiations with the EU Council were close to finding compromise positions with respect to some “technical aspects” of the SRM. However, on key issues such as the decision-making process for the SRM and the single resolution fund, some distance remained. It regretted the fact that Greece, which holds the Presidency of the Council of the EU, “has been deprived of sufficient room to make more than cosmetic changes”. ECON acknowledged that they were prepared to compromise over some concerns raised by member states, but would not sign off on a deal which establishes a mechanism which is “unfit for purpose”. It confirmed that draft documentation is being prepared prior to a plenary vote of the EU Parliament in April (to be taken irrespective of whether agreement has been reached with EU Member States over the SRM). This documentation will be based on certain principles, including:
- The European Central Bank (ECB) must be the only authority to decide whether a bank is ‘failing or likely to fail’, but a mechanism could be envisaged whereby others can “effectively voice their concerns”;
- Resolution actions concerning a specific bank should be decided only at the executive board level of the ECB – a role for the EU Council in this area “must be avoided”;
- The Parliament do not see the need for an intergovernmental agreement on the operation of the single resolution fund;
- Breaking the fund into “national compartments” is not necessary to address issues such as legacy debt and mutualisation of compartments into a single resolution fund should be speeded up considerably, with 50% of mutualisation occurring in the first year and the rest over the subsequent two years;
- A “rock-solid” guarantee of the bail-in system will have to be included in the single resolution mechanism regulation.