The Single Supervisory Experiment

The EU banking union proposals for centralised supervision of the largest EU banks represent a significant new step in the evolution of the single market for financial services. It will pose many challenges for the ECB supervisors and national regulators, and for the banks under ECB supervision. The rise of a powerful supervisor within the eurozone may strain the single market by generating conflicts, inconsistencies and supervisory arbitrage with other EU member states. Getting it working well is critical to preserving the financial stability of the EU and the reputation of all EU financial centres and banks.