Recently, the European Union finance ministers have taken a step closer towards building a banking union by approving legislation that sets up the Single Supervisory Mechanism (SSM) for bank supervision. This crucial agreement was reached after the long and painstaking debates. In the eyes of Europe’s leading economists, the banking union is supposed to become a reliable shield aiming to avoid the recurrence of 2008 crisis. Experts believe that the eurozone evidently needs such a regulator to withstand feasible financial disturbances and render a prompt bailout. The Single Supervisory Mechanism is to be launched into operation within the next twelve months. By the way, the startup has been postponed more than once. The main reason why it has been frequently shifted accounts for the discord among other countries unaligned with the eurozone. However, the parties managed to obtain consensus; hence, the decision was approved by the overwhelming majority including 11 non-eurozone countries. Even the UK being the main opponent of such novelties admitted the necessity of this supervision authority. Meanwhile, the Single Supervisory Mechanism is considered as the first leg in the banking union performance. The second leg is to agree on the rule book for bank resolution tools and deposit guarantees. Experts are certain that the new rules will help build a stable financial sector, restore fair lending conditions, and ensure that banks, not taxpayers, pay for their own mistakes.
