The European Central Bank has today (25 April) finalised rules giving it wide-ranging powers over euro zone banks, including the right to demand they increase their capital buffers.
The Single Supervisory Mechanism (SSM) framework regulation sets out how the SSM will cooperate with national supervisors from 4 November.
It also outlines the criteria that will define which euro zone retail banks will qualify for direct supervision by the ECB.
A list will be published in September, and those that do not qualify will continue to be overseen by their national authority.
The largest banks in the euro zone will come under the ECB’s oversight, which is carrying out a health check on nearly 130 banks.
Those banks were identified as potentially posing a risk to the wider economy should they suffer financial shocks.
The SSM was set up by European leaders to organise the resolution of failing banks with minimal cost to the taxpayer.
The ECB is hiring about 1,000 new staff to deal with the new role.