There is progress happening at the European Council as the statement made by the President of the European councilEurope, in presence of  the President of the European Parliament. Majority referred to the Nobel Prize as a tribute for the Union’s past achievements and an encouragement for the future. The focus was on the future of the Economic and Monetary Union.

The urgent element now is setting up a Single Supervisory Mechanism, to prevent banking risks and cross-border contagion from emerging. That’s why the European Council called tonight for swift progress, with the objective of agreeing on the legislative framework by 1st of January 2013. Once this is agreed, the SSM could probably be effectively operational in the course of 2013.

When establishing it, several aspects need taking into consideration:
– For the European Central Bank, which will play a central part, there must be a clear separation between its monetary responsibilities and its supervision functions.
– The ECB should also be able to carry out supervision directly in a differentiated manner, meaning: using national supervisors in regular supervisory tasks as much as possible.
– Obviously, the SSM will be built and implemented with the integrity of the Single Market for financial services in mind.
– And finally, it should be inclusive and transparent: all Member States are free and invited to join. This openness should be reflected in the governance structure, with appropriate rights and obligations for all participating countries.

The SSM is a first, essential step toward a complete integrated framework for the financial sector. Other steps also need to be taken quickly, starting with harmonising national resolution and deposit guarantee schemes.

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