Europe's Single Supervisory Mechanism and the Long Journey Towards Banking Union

Policy Brief
December 2012

The establishment of the single supervisory mechanism (SSM) is only one step on a longer path towards European banking union, which itself cannot be considered in isolation from the challenges of fiscal union and political union. Losing the current momentum for the completion of this early step would be unfortunate, not only in itself but because it would reinforce the current doubts of the European public and global investors about the very ability of European leaders to make effective decisions. Recent statements issued by the 17 euro area countries contain a promise of supervisory integration and centralized bank crisis management. Europe's leaders now need to deliver on this promise if they are to maintain, or regain, the trust of their constituents.