The Single Resolution Mechanism and the Single Resolution Fund: Substantive Issues and the Contradictory Democratic Deficit

This paper is aimed to examine the Single Resolution Mechanism (SRM) and the Single Resolution Fund (SRF), with particular reference to the effective level of control on their activity and the potential democratic deficit stemming from them. To this end it first provides a definition of resolution for banks, followed by the examination of why the efficiency of prudential supervision in the euro area is significantly linked to a centralised system of resolution. Within this ambit, it illustrates that the SRF is financed by contributions from the banking sector which transfer is based on a separate intergovernmental agreement between the Member States of the euro area. After, it analyses the relationships between the SRM and the European Banking Authority (EBA) and their several implications. Finally, the paper tries to show whether, and to what extent, it is possible to overcome the democratic deficit in the SRM and the SRF and its contradictions.