E.U. & U.S. Public Policy Forum European Union

The Development of the European Central Bank Single Supervisory Mechanism and Its Implications for Taiwan

Author:Der-Chin Horng Research Fellow

Release Date:2018/04/20

Origin of Topic

        The global financial crisis of 2008 brought to light many shortcomings of banking supervision in the EU, in particular, the general limitation of banking supervision to the national level and failure to effectively cover trans-national banking activities. The Single Supervisory Mechanism (SSM) is one of the most important reforms undertaken by the EU to address this supervisory failure. This mechanism highlights the Europeanization of banking supervision in the Euro-zone area; under the SSM, the European Central Bank (ECB) is responsible for the direct supervision of 120 significant bank groups and for guiding the supervisory activities of participating Member States as of 4 November 2014. The SSM is the core pillar of the EU’s banking union, and is seen as critical point of the accomplishment of the European Monetary Union and the resolution of the European debt crisis. If so, the SSM will significantly impact EU institutions, Member States, the banking sector, and the European economy. Based on a legal-study approach, this paper examines the following key issues concerning the SSM: its background, legal framework, scope and contents, institutional mechanisms, decision-making procedures, supervisory measures, practical operations, administrative penalties, supplementary measures, international cooperation. It also discusses the meaning and implications of the SSM, and compares the mechanism with relevant laws and policies in Taiwan, then proposes some suggestions for future banking supervisory reforms in Taiwan.(......more


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