The single resolution mechanism is the second pillar of european banking union. we need to understand the role assigned to it. Also, understand the need for such a mechanism.
First of all, what is the single resolution mechanism.
The single resolution mechanism centralize decisions about resolution at european level.
As stated earlier, it is the second pillar of european banking union.
The three pillars of banking union are as follows:
-The single supervision mechanism.
-The single resolution mechanism
-and, the deposit guarantee schemes.
In this article our main focus is to give a definition for the single resolution mechanism.
We want to understand its role.
The single resolution mechanism is assigned to the Single Resolution Board. This Board is composed of national resolution authorities.
Both the commission and council are also part of The single resolution mechanism.
The single resolution mechanism ensures:
*A neutral approach in treamtement of distressed banks.
*ensure smooth functionning of union market.
*consistent with the single supervision mechanism.
The single resolution mechanism plays key actions:
* draw resolution plans,
*adoption of decision related to resolution,
these actions are taken only for:
-significant financial institution, institution that the ECB decided to supervise directly, and cross boarder groups.
So , the single resolution mechanism ensure objectivity when dealing wih distressed banks. It also secure the fuctionning of the union market and is consistent with SSM.
The single resolution mechanism draw resolution plans, take decision related to resolution.
