Political Agreement at the level of European Parliament for the Commission Proposals on Banking Resolution as a key component of European Banking Union (20 March 2014) and subsequent signature of Intergovernmental Agreement on the Single Resolution Fund (21 May 2014)

On the 20 th of March and the 21 st of May 2014 two most relevant political developments were produced within the ongoing process leading to a European Banking Union (however these may prove of a limited reach given the actual requirement of a true and effective European Banking Union). In the first case, the European Parliament and the Council reached a political agreement on the proposed Single Resolution Mechanism (SRM) that should complement the Single Supervisory Mechanism (SSM) established by the end of 2013. This Single Resolution Mechanism will be normatively based in two texts, comprehending a SRM Regulation and an Intergovernmental Agreement related with some particular aspects of the Single Resolution Fund to be established. In turn, this second element (Intergovernmental Agreement – IA) was signed by 26 Member States on the 21 st of March 2014, concerning the transfer and mutualisation of contributions to the Single Resolution Fund (SRF). This SRF should ensure the availability of medium term funding to allow banks to continue operating while being restructured, having a target level of 55 billion Euros and the ability to borrow from the markets if decided by the Single Resolution Board (however, it will only reach the target level over eight years, starting in 2016, and during this long transitional period there will be national compartments which will be progressively merged).

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