27 / 38
The European Banking Union: a comprehensive overview of its legal framework
3
• establishing pan-European rules on the recovery and resolution of unvi-
able credit institutions (and investment Àrms),
11
and
• amending the existing regulatory framework on deposit guarantee schemes.
12
(iii)
Finally, to examine, in the medium term, how to shape the conditions
for the establishment of:
• a supranational entity for the resolution of unviable credit institutions,
• a supranational resolution fund for covering funding gaps, provided that a de-
cision is made in favour of the resolution of unviable credit institutions, and
• a supranational deposit guarantee scheme,
which would allow the completion of the EBU.
1.2 The outline of the reform agenda: the main pillars
of the EBU
Under this political agenda, the establishment of the EBU
13
will create a ‘Euro-
peanised bank safety net’
14
consisting of:
• a Single Supervisory Mechanism exclusively for the banking sector (i.e.
not for the other two sectors of the Ànancial system, namely insur-
ance and securities) and mainly for credit institutions legally incorpo-
rated in euro area Member States, with regard to their micro-prudential
supervision,
15
11. COM(2012) 280 Ànal.
12. COM(2010) 369 Ànal.
13. For arguments for or against establishing a European Banking Union, see indicatively (out
of a vast existing literature)
Louis (2012)
,
Beck (2012b)
,
BoÀnger et al. (2012)
,
Carmas-
si, Di Noia and Micossi (2012a)
and
(2012b)
,
Constâncio (2012)
,
House of Lords (2012)
,
Pisani-Ferry, Sapir, Véron and Wolff (2012)
,
Schoenmaker (2012a)
,
Sibert (2012)
,
Wyplosz (2012)
,
Herring (2013)
, and
Huertas (2013)
.
14. For an overview of the components of the ‘bank safety net’, aimed at contributing to
the stability of the banking system, see
Guttentag and Herring (1986a)
,
Demirgüç-Kunt
and Huizinga (1999)
, and
Gortsos (2012a)
, pp. 90-106 (with further references).
15. Micro-prudential banking supervision aims at assessing the quality of banks’ portfolios,
and ascertaining compliance with the applicable regulatory framework, in order to pre-
vent banks’ exposure to exceptional, unmanageable risk levels. It is conducted by means
of regular and extraordinary examinations performed by supervisory authorities them-
selves, and the audit of annual accounts and other Ànancial and organisational aspects
by external auditors on behalf of supervisory authorities. Micro-prudential banking su-
pervision and its close correlation with micro-prudential regulation (see on this also be-
low in
Section D, under 1.2.1.4
) are discussed in detail, by mere indication, in
Blumer
(1996)
,
European Central Bank (2001)
,
Barth, Caprio and Levine (2006)
, pp. 110-132,