Darvas and Wolff
SHOULD NON-EURO AREA COUNTRIES JOIN THE SSM?
4. The alternative treatybase, Article 352, was notpursued and the Councilhad to find a compromisesolution based on Article127(6) which refers to theECB. Article 127(6) says thefollowing:
“The Council,acting by means of regula-tions in accordance with aspecial legislative proce-dure, may unanimously,and after consulting theEuropean Parliament andthe European Central Bank,confer specific tasks uponthe European Central Bankconcerning policies relatingto the prudential supervi-sion of credit institutionsand other financial institu-tions with the exception of insurance undertakings.”
5. Similarly, the title of Arti-cle 6 dealing with non-eurocountries was changedfrom
“close cooperationwith the competent authori-ties of non participatingMember States”
in the Sep-tember 2012 proposal of the Commission to
“closecooperation with the com- petent authorities of partici- pating Member Stateswhose currency is not theeuro”
in the December 2012draft regulation.6. When the national super-visor is not the centralbank, then a representativeof the central bank can alsoparticipate in the supervi-sory board. But for votingthey will have only one vote(Article 19(1)).
proposal for a regulation (COM (2012) 511)employs as a Treaty base Article 127(6) of theTreaty on the Functioning of the EU (TFEU). Thisarticle puts the European Central Bank at thecentre of the mechanism. The ultimate decision-making body of the ECB is its Governing Council(Art. 129(1), TFEU), in which the non-euro areacountries do not have a vote. The use of this Treatybase was seen by many non-euro area countriesas essentially preventing them from participatingin the mechanism
. In the subsequentnegotiations, significant modifications were made,partly with the aim of addressing the concerns of non-euro area members. The significance of thechanges is also highlighted by a change in thevocabulary. Article 2(1) of the Commission’sSeptember 2012 proposal put forward thefollowing definition:
“‘participating Member State’ means a Member State whose currency is theeuro”
, while the December 2012 draft regulationchanged this definition to
“‘participating Member State’ means a Member State whose currency isthe euro or a Member State whose currency is notthe euro which has established a closecooperation in accordance with Article 6”
.At the time of writing, Council negotiations with theEuropean Parliament are taking place, and a ple-nary vote is expected in April 2013, which wouldlead to the enactment of the draft regulation a fewmonths later.In this Policy Contribution we assess the Decem-ber 2012 draft regulation (Council, 2012) from theperspective of EU states outside the euro area,and we evaluate arguments against, and in favourof, joining the SSM. The next section analyses thelegal text, while section 3 discusses the argu-ments for and against. The last section concludes.
2THE DRAFT SSM REGULATION: KEY ASPECTSFOR NON-EURO AREA COUNTRIES
In this section, we briefly discuss some of the keyaspects of the December 2012 draft SSM regula-tion, which are most relevant to non-euro area par-
‘The SSM is just a part of the banking union and as such cannot deliver the full benefits, but itoffers a number of advantages. In particular the supervision of cross-border banks should beimproved and supervisory practices should be made more consistent.’
ticipating member states. We also review the safe-guards for non-participating EU member states.
Article 6 of the draft regulation defines the terms of cooperation of participating member states thathave a currency other than the euro. The SSM isopen to non-euro EU countries on the basis of
. Close cooperation essentiallyrequires non-euro member states that wish to jointhe SSM to adopt the necessary legal frameworkand cooperate with the ECB along the lines codi-fied in the draft regulation. This means, in particu-lar, that the national authorities, like thoseauthorities within the euro area, will be bound toabide by guidelines and requests issued by theECB and will be responsible for providing the ade-quate information.
Right to exit
The draft regulation’s Article 6 allows for the exit of non-euro area participating member states inthree scenarios: 1) after three years without qual-ification (Article 6(6a)); 2) exclusion by the ECBin the event of a major non-compliance by theauthorities of the non-euro area country (Article6(6)); and 3) expedited exit procedure at therequest of the non-euro area country in case of amajor disagreement with a supervisory decisionimpacting the country (Article 6(6aab)). Followingan exit, re-entering the SSM is possible only afterthree years.
SSM draft decisions will be taken by a supervisoryboard created by the draft regulation. Draft deci-sions will be deemed adopted unless the ECB Gov-erning Council objects within a period to bedefined but less than 10 days (Article 19(3)). Thesupervisory board will consist of the chair, the vicechair (an ECB executive board member), four rep-resentatives from the ECB and one representativefrom the supervisory authority of each member