The concept of systemic importance in European Banking Union law

This paper examines the meaning of the concept of systemic importance and its role in the European Banking Union’s (EBU) institutional setting. It shows that this concept is treated inconsistently across the EBU pillars. The paper identifies various factors that determine such an inconsistent treatment: first, there is a lack of a common European Union (EU) legal definition of systemic importance applicable to the various pillars of the EBU; secondly, the European Central Bank (ECB), the Single Resolution Board (SRB) and the European Commission (EC) engage in divergent and inconsistent interpretations of the meaning of systemic importance; and, thirdly, in the EBU, systemic importance is given an asymmetrical role in the shaping of Single Supervisory Mechanism (SSM) supervision and Single Resolution Mechanism (SRM) resolution. In order to address these inconsistencies, this paper proposes, on the hand, a greater harmonisation of the concept of systemic importance in EBU law and, on the other hand, a redefinition of the powers of the SRB in bank resolution.