The Application of National Banking Supervision Law by the ECB: Three Parallel Modes of Executing EU Law?
| Author | Andreas Witte |
| DOI | 10.1177/1023263X1402100105 |
| Date | 01 March 2014 |
| Published date | 01 March 2014 |
| Subject Matter | Article |
21 MJ 1 (2014) 89
THE APPLICATION OF NATIONAL BANKING
SUPERVISION LAW BY THE ECB: THREE
PARALLEL MODES OF EXECUTING EU LAW?
A W*
ABSTRACT
e Single Superv isory Mechanism (SSM), which establishes the European Central Bank’s
(ECB) competence for the prudential supervision of banks, will assume operations in the
course of 2014. is mechanism will have to rely on variou s acts across which the material
provisions of EU banking regulation are to be found: regulations, directives and national
statutes that implement directives . e pur pose of this paper is to examine di erent ‘modes’
of executing substantive European legal provisions, that is, the avenues by which the
legal norms are translated into binding decisions which are addressed to a speci c credit
institution, in an individual case . A er setting out the context in which the establishment
of the SSM is taking place, this paper concludes that the SSM Regulation contains three
such modes for executing banking law: direct powers drawn from the SSM Regulation
itself; powers of instruction for the ECB to command national supervisors to use their
powers under national law in a particul ar way; and an application of national statutes by
the ECB as a European organ. e rst mode is trivial; the second is not novel, but such
powers have signi ca ntly expanded in the SSM Regulation; and the third mode is genuinely
novel. is paper discusses the three modes and attempts to conceptualize the third in a
theoretical framework. It also discusses the implications of the three modes regarding the
availability of judicial review.
Keywords: Single Supervisory Mechanism; nancial supervision; European
administr ative law; judicial review; dualism
* MJur, MSc (Oxon); Dipl.-Jur., Wirtscha sjuri st (Bayreuth). e author i s an employee of the Bankin g
and Financia l Supervision Department of Deutsche Bundesban k, Frankfurt. e views presented in
this paper are t he author’s personal opinion and must not be read as re ecting the positions of the
Bundesbank.
Andreas Witt e
90 21 MJ 1 (2014)
§1. INTRODUC TION
Since its earliest days, it has been a feature of European law that the authorities of
Member States apply and execute it. is is a result of the relatively weak admin istrative
capacities with which t he founders chose to equip the Communities and t he Union itself.
is feature also distinguishes the European integration project from many national
decentralized systems, where federal law is applied and executed predominantly by
federal aut horities.1 is set-up has been elevated to t he status of a general principle on
which the institut ional sy stem of the Community i s based.2
is is, of course, not the only way of execut ing European law. In a growing number of
other cases, di rectly applicable European law provides for lega l bases on which European
bodies may act in individual cases. It is possible, for instance, to establish by means of
secondary law specia lized European agencies and to entr ust the m w ith de ned executive
tasks.3 In addition, organs of the Union esta blished by primary law itsel f may be equipped
with executive powers.4 An example of such an organ is the European Central Bank
(ECB), which has new far-reaching executive powers of banking supervision. Recent
legislation has establ ished the Single Supervisor y Mechanism (SSM), through which the
ECB is assigned the primary responsibility to enforce compliance by European credit
institutions with regulatory requirements.
e present paper takes a closer look at t his set-up. It examines the di erent avenues
provided for in the Regulation of execut ing substantive EU banking super visory law. For
the most novel of these avenues – the application of national l aw by a European body – a
theoretical conceptua lization will be attempted.
e structure of this analysis is as follows. Section 2 will provide the context by
outlining the recent reform proposals for banking supervision in Europe and the need
for a clear legal basis for superv isory action. Sections 3–5 form the c ore of the paper: they
discuss in detail the three di erent modes of executing substantive banking law under
the SSM and problems associated with them. Section 6 will conclude the contribution
with a summar y of the ndings and a brief out look.
1 An example for th is is the United States, where the feder al government, in enacting su bstantive law,
typical ly also establishes fe deral agencies to apply and exec ute these laws (or entrusts exis ting federal
agencies with t hem). It is, however, not true for all federal systems. In Germany, for instance, it is
normal for federa l laws to be applied and executed by agencie s of the states (Länder), and the federal
level maintai ns relatively weak resources for direct execution of its laws by it s own agencies. See
Articles. 83 e t seq. of the Grundgesetz.
2 Joined Cases 20 5–215/82 Deutsche Milchkont or GmbH and others v. Germ any [1983] ECR 2633, para. 17.
3 Limits to the establishment of such a gencies by secondar y law, and their equipment with binding
powers, were set very e arly during this developme nt: Case 9/56 Meroni & Co. v. High Authority [1 958]
ECR 11. In addition to agencies es tablished by specia l secondary legis lation, Regulation 5 8/2003 allows
for the facilitated founding of new ‘exec utive agencies’ by the Commission. Se e M. Chamon, ‘EU
agencies betwe en Meroni and Romano or the devil and t he deep blue sea’, 48 Common Market Law
Review 4 (2011), p.1055–1075.
4 An example wou ld be Case 294/83 Les Verts v. Parliament [1986] ECR 1339, a case concerning
reimbursement of exp enditure by the Europea n Parliament – an activ ity executive in natu re.
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