Interview with Yves Mersch – Part One
European banking union and single supervisory mechanism

How do you rate the prospects for the banking union after the meetings of the Eurogroup and the Ecofin in Dublin last weekend?
There was progress concerning the legal text of the regulation. The hope is that this will be finally closed at the European level and in those countries where there needs to be parliamentary scrutiny, like Germany. The added declaration opens the possibility for limited Treaty changes. It is not legally binding, and does not change the pressing need that the single supervisory mechanism (SSM) has to be complemented by a single resolution mechanism (SRM) and a resolution fund. The Commission has reiterated in Dublin its commitment to come forward with such a proposal in the summer months. I hope the present proposal on national solutions, which is a directive pending in the European Parliament, will be able to be concluded in due time. But the interdependence between the Ssm and the Single resolution mechanism is as obvious as ever.

There seems to be a risk of delay because of possible Treaty changes.
The exact consequences need to be seen in the future. It's a political declaration which is legally not binding. It is important to have a comprehensive solution. We could not start the monetary union (EMU) without the Stability and Growth Pact; we cannot have an SSM without having a functioning SRM.

So you are still confident about respecting the timing of the SSM.
The possibility of the regulation entering into force in the summer is still given. But it is always difficult to predict the end of parliamentary processes precisely. We know for sure that the German parliament is going into recess in mid-July. I hope that it will be delivered what has been promised at the political level. We at the ECB are on the implementation side, but we first need legal certainty.

Is the main achievement of the European summit of June 2012, which was to separate sovereign and banking problems, being undone, because of increasing political obstacles?
The Hopping procession of Echternach, an annual Roman Catholic dancing procession held in a Luxembourg town, seems to characterize European integration: two steps forward, one step backward. There are 27 member countries, 17 in the euro area, permanently confronted with national political events, such as elections, which tend to sometime have consequences on the smooth process of European integration. However, we are dealing with something essential for market credibility of the whole euro area and therefore I am still confident that responsibility in the medium and long term will prevail over short term considerations.

What is the time frame for the SSM? The direct recapitalization of banks by the ESM depends on it and the case of Slovenia, where banks are facing acute problems, is coming up soon.

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