After a marathon negotiating session, European Union lawmakers this week reached a compromise on the method for winding down failing banks in the bloc, a contentious yet crucial piece of the planned EU banking union.
The Single Resolution Mechanism (SRM) would be triggered by the supervisor of the European Central Bank (ECB), based on either the recommendation of the ECB itself or the appointed Resolution Board, according to information released by European Parliament following the deal. The broader banking union initiative also is housed under the ECB, and virtually all major banks in the EU will fall under its supervision. SRM was the last major piece of the banking union. Under the agreement, the European Commission, which would have a role in designing resolution schemes to address specific failing banks, and the European Council would be able to object to specific resolution plans.
