14 Banking Union: Single Supervisory
Mechanism
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| Interinstitutional Agreement (IIA) between the European Parliament and the European Central Bank on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the ECB within the framework of the Single Supervisory Mechanism
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| Legal base | -- |
| Department | HM Treasury
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| Basis of consideration | EM of 10 October 2013
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| Previous Committee Report | None
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| Discussion in Council | None planned
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
14.1 In recent years various measures have been discussed,
and some introduced, to strengthen economic governance in the
eurozone and in the wider EU. Much of this activity has been concerned
with countering the present eurozone difficulties. Measures advocated
have included a "banking union". In this context in
September 2012 the Commission proposed the first stage of a Banking
Union, involving two draft Regulations. One would confer specific
tasks on the European Central Bank (ECB) concerning policies relating
to the prudential supervision of credit institutions — a
Single Supervisory Mechanism (SSM). The other, would amend consequentially
the Regulation establishing the European Banking Authority (EBA).[41]
The document
14.2 On 9 October, the European Parliament approved in its
plenary session an Inter-Institutional Agreement (IIA) with the
ECB on arrangements for holding the ECB to account for its supervisory
functions under the SSM.[42]
14.3 The agreement is required as a result of
two provisions in the draft Regulation conferring specific tasks
on the ECB concerning policies relating to the prudential supervision
of credit institutions, that is the draft SSM Regulation:
- Article 20(8) would provide
for an agreement to be concluded on the detailed arrangements
for organising confidential oral discussions behind closed doors
between the Chair of the ECB Supervisory Board and Chair and Vice-Chair
of the competent committee of the European Parliament ¯
this agreement should comply with confidentiality requirements
in EU law; and
- Article 20(9) would require the ECB and European
Parliament to conclude appropriate arrangements on the exercise
of democratic accountability and oversight over the ECB's supervisory
tasks ¯
these should cover, inter alia, access to information,
cooperation in investigations and information on the selection
procedure of the Chair of the Supervisory Board.
14.4 The IIA covers the following areas:
- the ECB will submit to the
European Parliament and publish on the SSM's website an annual
report on the execution of its supervisory tasks, and provide
quarterly reports on the operational implementation of the SSM
Regulation during the start-up phase;
- the Chair of the Supervisory Board will participate
in ordinary public hearings on the execution of the ECB Supervisory
Board's tasks, as well as ad-hoc exchanges of view on supervisory
issues and confidential meetings;
- the ECB will reply in writing to written questions
put to it by the European Parliament;
- the ECB will provide the European Parliament
with a comprehensive record of the Supervisory Board's proceedings,
and publish on its website a guide to its supervisory practices;
- the European Parliament will implement safeguards
to ensure that information provided by the ECB is treated with
sensitivity;
- procedures for the European Parliament to be
involved in the selection process of the Chair of the Supervisory
Board, including submitting questions to the ECB on the shortlist
of candidates and the selection criteria;
- arrangements for the ECB to assist in investigations
led by the European Parliament and confidentiality requirements
on information provided;
- the ECB will share its draft Code of Conduct
for staff working on banking supervision with the European Parliament
and inform it on implementation;
- the ECB will inform the European Parliament on
procedures for adopting ECB regulations, decisions, guidelines
and recommendations and the consultation process around the draft
acts; and
- the IIA will be reviewed every three years.
The Government's view
14.5 The Financial Secretary to the Treasury
(Sajid Javid) reminds us that the Government's position is that
the UK will not participate in any element of Banking Union, including
the SSM and so the IIA will not impact directly on the UK.
14.6 The Minister continues that:
- the IIA was considered an essential
component of the European Parliament's agreement to the overall
SSM legislative package;
- although the Treaty base for the SSM Regulation
(Article 127(6) TFEU) only requires the European Parliament to
be consulted, the associated Regulation consequentially amending
the Regulation establishing the EBA has as its Treaty base Article
114 TFEU and the European Parliament withheld its agreement to
the SSM package as a whole until the draft IIA was concluded;
- now that that European Parliament has formally
approved the draft IIA, the SSM Regulation and the EBA amending
Regulation will proceed to Council for formal agreement; and
- the IIA is consistent with the relevant Articles
in the SSM Regulation and will not have an effect on the substance
of the legislative package.
Conclusion
14.7 Whilst clearing this document, we draw
it to the attention of the House, as supplementary information
on the Single Supervisory Mechanism.
41 HC 86-xiv (2012-13), chapter 1 (17 October 2012),
HC 86-xxix (2012-13), chapter 17 (23 January 2013), HC 86-xxxviii
(2012-13), chapter 16 (17 April 2013) and HC Debs, 6 November
2012, cols. 805-833. Back
42
The text can be seen at http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2013-0404+0+DOC+XML+V0//EN&language=EN#BKMD-2. Back
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