The European Central Bank (ECB) has officially assumed responsibility for the supervision of euro area banks, following a year-long preparatory phase which included an in-depth examination of the resilience and balance sheets of the biggest banks in the Euro area.

The Single Supervisory Mechanism (SSM) is a new system of banking supervision, comprising the ECB and the national competent authorities of the participating countries. It aims to contribute to the safety of credit institutions and the stability of the European financial system in order to ensure consistent supervision.

"Much has been achieved to prepare for ECB Banking Supervision. We now have a unique opportunity to develop a culture of supervision that is truly European, building on the best practices of supervisors from across the euro area," said Danièle Nouy, chair of the Supervisory Board of the ECB.

The ECB will directly supervise 120 significant banking groups, which represent 82% (by assets) of the euro area banking sector. For all other 3,500 banks the ECB will also set and monitor the supervisory standards and work closely with the national competent authorities in the supervision of these banks. 

"European-level banking supervision will improve and strengthen financial stability, ensuring a level playing field in the supervisory requirements to be met by banks," said Sabine Lautenschläger, vice-chair of the Supervisory Board and Executive Board member of the ECB.

The ECB assumes the supervisory tasks conferred on it by the SSM Regulation one year after the regulation entered into force. Over the past year, much preparatory work has been undertaken, including the completion of the comprehensive assessment, a health check of the biggest banks, as well as the adoption of legal acts defining how the SSM operates and the establishment of new governance structures at the ECB.