Implementing Single Resolution Mechanism –Advantages And Challenges

Banking system of European Union was unsettled by present economic and financial crisis, and also both principle and effectiveness of Banking Union of EU. In effect, Banking Union confronts with risk aversion, bank run and financial disintegration, which explains why it was decided, for EU’s Banking Union, to build European Banking Union (EBU), as key element of European Monetary Union (EMU). EBU must be a comunitary tool for monitoring and harmonising banking system of EU, with three main components; implementin gespecially one of these, Single ResolutionMechanism (SRM), is most important, but very difficult. Why? Firstly, implementing SRM requires several measures under taken by EU, in order to override defend of sovereignty, for allowing a better functioning of Single Market. This may not be interpreted simply as complementary action of national prudential supervision, but as acts which are about to confer to European Commission supplementary powers. On the other side, an existent SRM is likely to induce at least appearance of difficulties or flaws in what concerns the other economies, namely the key economies from Euro-zone area (Germany, UK, etc.). And, in addition, SRM will have to adjust itself with and for the existent European Stability Mechanism (ESM).