The Single Supervisory Mechanism (SSM) has been operational since 4 November 2014 and this year celebrates its 10th anniversary. The SSM is a system under which the largest and most significant banks in participating European countries are directly supervised by the European Central Bank (ECB).

We strive to be a global leader in banking supervision, as a modern supervisory authority is crucial to secure, sound and sustainably successful banks, said Michael Theurer on the occasion of the SSM’s ten-year anniversary. Mr Theurer is the Bundesbank Executive Board member under whose remit banking supervision falls.

Its objective is to ensure consistent supervision of banks categorised as significant in order to promote financial stability and minimise risk. A bank or group of banks is classified as significant if it meets certain criteria, for example if the total value of its assets exceeds €30 billion or comes to 20% of national gross domestic product. Credit institutions that are one of the three largest established in a participating Member State are also classified as significant.

Joint Supervisory Teams: working together for greater stability

Supervision of these significant banks is carried out by Joint Supervisory Teams (JSTs). These teams are formed of ECB staff and staff from national supervisory authorities. In Germany, these are the Federal Financial Supervisory Authority (BaFin) and the Deutsche Bundesbank. A JST is established for each significant bank or group of banks.

Work in the JSTs is particularly important, as BaFin and the Bundesbank cooperate closely in this context with the ECB and, if applicable, other national supervisors to ensure direct supervision and decision-making.

This teamwork requires open communication and the timely exchange of information within the JSTs. Ultimate decision-making power with regard to significant institutions lies with the ECB, however.

Supervision of the approximately 1,400 less significant banks in Germany continues to be carried out directly by BaFin and the Bundesbank, while the ECB exercises indirect supervision, for example by laying down common guidelines on supervisory practices.

Common rules for European banks

The single rulebook is a uniform set of rules that harmonises banking supervision across Europe. It consists of a series of legal acts that are binding for all financial institutions. The single rulebook aims to create a level playing field and to ensure that all euro area banks apply the same rules.

This harmonisation makes it easier to supervise banks across borders and ensure that they all meet the same high standards. This helps to strengthen trust in the European banking system and safeguard financial stability.