(A) EUROPEAN CENTRAL BANK (ECB) had initially, two functions:
(a) to establish banking regulations for the Euro zone, their implementation being afterwards controlled by the SSM.
(b) Supervision of the 122 largest banks representing 82% of banking assets of the Euro zone.
(B) SINGLE SUPERVISORY MECHANISM (SSM) implemented on March 19, 2013.
It was a regulatory body in charge of controlling, on a second-degree, smaller banks in the Euro zone; these continued to be supervised, on a first degree, by their national authorities.
(C) EUROPEAN FINANCIAL STABILITY FUND (EFSF)
(a) Created on May 9, 2010
Providing financial assistance to European countries in economic difficulties; it could:
(i) redeem bonds on secondary markets,
(ii) participate in the rescue of endangered banks.
(iii) grant loans to countries in economic difficulties, only when, these were unable to borrow on finance markets at acceptable rates.
Initially of €440 billion; the EFSF has seen afterwards its capacity raised up to €1 000 billion through the issue of bonds on finance markets.
(d) End of activity: July 1, 2012.
(D) EUROPEAN FINANCIAL STABILITY MECHANISM (EFSM)
Had at his disposal monies stemming from an emergency funding program.
These funds were raised on finance markets and guaranteed by the European Commission thanks to the use of the European Union budget.
It worked under the supervision of the European Commission and was intended to preserve the financial stability of the European Union in providing financial assistance to the Member States in economic difficulties.
(b) Cessation of activity: July 1, 2012.
(A) FUND FOR DEPOSITS GUARANTEE AND RESOLUTION (FDGR)
(a) Established on 31-12 - 2010;
(b) Deposits guarantees; countries of the European Union will:
(i) by 31-12-2010 provide banks guarantees in favour of depositors with assets from €100,000 onward,
(ii) reduce to 5 working days the acknowledgment of banks insolvencies,
(iii) implement the repayment by failed banks of customers deposits within 20 working days.
(B) EUROPEAN CENTRAL BANK (ECB)
Supervision, on a first degree, of the 128 largest banks of the European Union.
(C) EUROPEAN BANKING AUTHORITY (EBA)
Operational as of January 1, 2011; its functions are:
(a) implementation of supervision rules for European banks in lieu of ECB initial responsibilities,
(b) to carry stress tests for the most important banks of the Union.
(D) EUROPEAN STABILITY MECHANISM (ESM)
Implemented on September 27, 2012; since July 1st 2012 it replaced:
(i) European Financial Stability Fund ( EFSF) and
(ii) European Financial Stability Mechanism (EFSM).
It can raise up up to €700 billion on finance markets.
(i) help out countries in financial difficulties,
(ii) rescue private banks in troubles.
(E) SINGLE RESOLUTION MECHANISM (SRM)
It is intended to consolidate the European banking system through a "continuous control activity" which is entrusted to the ECB.
As an actor of the SRM, the ECB can take binding decisions in the course of its supervisions;
ex: assessment of an adequate level of equity against estimated risks.
January 1, 2016 for all the components of the system.
Is restricted to the 128 banks under the ECB direct supervision.
It is intended to allow orderly resolutions of banks failures with the least possible cost to i) taxpayers and ii) the real economy.
(d) Components, the SRM consists of two bodies:
(i) COUNCIL OF UNIQUE RESOLUTION (CUR)
The European Central Bank reports to the COUNCIL OF UNIQUE RESOLUTION (CUR) the likely failure of a bank.
When the conditions for a feasible resolution are met, the CRU adopts a resolution scheme.
The resolution scheme is immediately sent to the European Commission.
(ii) FUND OF UNIQUE RESOLUTION (FRU)
Is used for the resolution of failed banks.
It is funded by the banking sector with a capacity up to € 55 billion which should be reached in 2022.
The FRU will be built through "National compartments" which, after a transitional period of 8 years, will be merged together.
Contrary to what has been emphasised, it will not be cut off : sovereign debts and those stemming from banks' bankruptcies will follow on being aggregated.
Indeed, for the time being when MES lends directly to banks in difficulties, it calls for Countries' guarantees ; what will be on this account the SRM policy ?
Within the SRM overall financing resources, each country will be assigned its own share ; on which basis will it be ?
The people responsible for bailing out a bank are listed in the following order :
b) creditors, and
c) when considered necessary by governments' authorities, depositors may be called to help out a banks' rescue ; starting with deposit balances in excess of € 100 000. (Mr. Michel Barnier, European Commissary, statement dated 19th December 2013).
Deposits will be protected by Governments up to € 100 000 ; beyond there is no guarantee .
Protected deposits will be reimbursed within 7 days.
This is as good as despoliation and thus may entice holders of sizable deposits to look for more hospitable jurisdictions.
Coordination of European deposits'guarantees laws : in the light of the above, it looks like a deception.
The financial rescue of a "bank in difficulty", appears currently to be, the number one consideration with little thought being paid to the actual causes of the disaster nor their remedies.
Should a thorough analysis of the jeopardized bank is not carried out department by department, and no appropriate actions are implemented to correct the evidenced wrong doings, subsequent invested cash will be to no avail :
"the same causes will produce the same results".
In some instances public financial risks and citizen's losses have been generated by some irresponsible banks executives.
It is necessary to remind to some banks managements that banks are responsible for carrying out essential public services hence those executives do carry personal responsibilities towards the society into which they operate.
When it is clear that either ineptitude or lack of responsibility or deceit from some banks directors have been the grass root for banks' failures, then, these executives' responsibilities should be called upon to justice by their governments.
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