From the national level to the ECB : the implications of the single supervisory mechanism on the Maltese financial regulator

Abstract

The past decade has been a decade of hectic financial reforms for the EU. The financial crisis 2007/2008 has exposed a myriad of weaknesses within the European financial system, which had wide repercussions on the finances of EU member states, leading to negative spill overs between member states threatening to bring down the Euro and the EU. At a Euro area summit in the summer of 2012, Euro area leaders made a historic move and agreed to create the Banking Union for Eurozone banks, transferring national supervisory and resolution functions with respect to credit institutions, to the supranational sphere. This led to a process of centralization and further integration within the European financial landscape, setting up the Single Resolution Mechanism (SRM) under the central authority of the ECB and the Single Resolution Mechanism (SRM) under the central authority of the Single Resolution Board. This study will focus on the first pillar of the banking union, the SSM which officially came into force on the 4th November 2014, shedding light on the implications of the SSM on the Maltese financial regulator, the Malta Financial Services Authority (MFSA). The research also has the goal to uncover the process which led to the establishment of this mechanism, which transferred the supervisory function from the national level to the ECB, analyzing the weaknesses exposed in the crisis and looking into EU initiated process, while scrutinizing several conceptual and theoretical contexts regarding the centralization of supervision in the Eurozone.