THE SINGLE SUPERVISORY MECHANISM (SSM)

25 / 38

Section A:
The European Banking Union:
a comprehensive overview
of its legal framework1
1. The political agenda
1.1 The decisions of June 2012 and the European
Commission’s initiatives
(a) The creation of a ‘European Banking Union’ (hereinafter the ‘EBU’) is a
very ambitious political initiative, which was tabled at the Euro Area Summit of
29 June 2012, amidst the current Àscal crisis in the euro area, which became
manifest in 2010.2 The main rationale behind this initiative is summarised in the
following sentence of the Summit’s Statement:
“We afÀrm that it is imperative to break the vicious circle between banks and
sovereigns.”3
The European Summit which was held concurrently on 28-29 June decided
to invite the President of the European Council to develop, in close collabo-
ration with the President of the European Commission (hereinafter the ‘Com-
mission’), the President of the Eurogroup and the President of the European
Central Bank (hereinafter the ‘ECB’), a speciÀc and time-bound roadmap for
the achievement of a genuine Economic and Monetary Union4 (hereinafter the
1. This section is an extended and elaborated version of work previously published as Sec-
tion A in Gortsos (2014a) [see also Gortsos (2014b)]. It is also updated to reÁect the sig-
niÀcant developments in direct public Ànancial assistance provided by the European Sta-
bility Mechanism.
2. For an evaluation of this crisis and the related policy responses, see indicatively Belke
(2010), Eichengreen, Feldmann, Liebman, von Hagen and Wyplosz (2011), pp. 47-64,
Athanassiou (2011c), Aizenman (2012), Caminal (2012), Avgouleas and Arner (2013),
de Grauwe (2013), Stephanou (2013), Hadjiemmanuil (2015), pp. 6-10, d’ Arvisenet
(2015), and Zimmermann (2015).
3. Euro Area Summit Statement, 29 June 2012, Àrst paragraph, Àrst sentence, available
at: On
the ‘vicious circles’ (also called ‘vicious cycles’, ‘diabolic loops’ or ‘doom loops’) between
the banking sector and sovereign bond markets, from a historical perspective, see Mitch-
ener (2014), with extensive further references.
4. European Council Conclusions, 28/29 June 2012, EUCO 76/12, paragraph 4(b), available
at: