On 18 April 2023, the European Commission (Commission) published a report to the European Parliament and the Council on the single supervisory mechanism (SSM) established pursuant to Regulation (EU) No 1024/2013 (SSM Regulation).

The SSM was established in November 2014 as a key first step towards EU Banking Union to ensure high-quality supervision of credit institutions in the EU, implement the EU’s policy on prudential supervision of credit institutions in a logical and effective manner, and to apply the single rulebook consistently.

The SSM Regulation requires the Commission to undertake a broad review of the overall application of the SSM every three years. The review aims to identify the potential impact on the smooth functioning of the internal market. This report covers the second review and follows up on the findings of the 2017 review to assess whether the shortcomings identified at the time have been duly addressed. It also covers areas in scope of the mandate in Article 32 of the SSM Regulation that were not assessed during the 2017 review, as at that time, there was no sufficient information available to draw conclusions (for example, there were no cases of close cooperation agreements to examine). Moreover, the review focuses on specific high-priority developments and risks to the financial stability of the banking sector.

The review leads the Commission to conclude that, overall the SSM is functioning well. It has become a mature, established supervisory authority that delivers on the objectives set out when it was created. It helps ensure that banks are well prepared and capitalised for economic and financial crises. It also provides good quality and proactive banking supervision, rapidly adapting to supervisory challenges as shown during the COVID-19 pandemic. Co-operation within the SSM between the European Central Bank and Member State competent authorities is working well. Equally positive is the feedback on how close cooperation is working.