The Problem of the Relations between the European Central Bank and the European Banking Authority

By Sveva Del Gatto

 

Since the autumn of 2014, the European Central Bank (ECB) has had the authority to supervise the banking sector in the entire Eurozone. This new regime is a significant departure from the previous system: pursuant to the creation of the Single Supervisory Mechanism (SSM), the EBA’S regulatory role should remain essentially unchanged; however, in the realm of supervision, in certain areas a need for clarity as to the allocation of responsibilities between the EBA and the ECB is necessary. The ECB regulation provides for cooperation between the ECB and the NSAs, but these provisions alone are not sufficient. This article examines the significant legal issues raised by the creation of the SSM, especially with reference to competences and the cooperation between the ECB and the EBA. In particular, the article analyses the role of the ECB as a prudential supervisor and that of the EBA as a European banking regulator, and analyses the interaction between the EBA and the ECB. The article concludes that the SSM’S performance could suffer due to the unclear state of the relationships between the ECB and the EBA. More specifically, the banking supervisory regime needs a leading authority to coordinate supervision among all European countries. This role could be played by the EBA, but for the moment, the EBA appears to be an «overarching umbrella which has no teeth».