The Single European Mechanism (SRM) will be launched over the next three months, with the aim of rescuing or winding up stricken banks with minimal recourse to taxpayers’ money.

The SRM will consist of a board and a fund, and will cover banks overseen by the Single Supervisory Mechanism (SSM) which became operational last month, and represents a concluding part of the new Banking Union.

The board will be the European resolution authority for the Banking Union and will work in close cooperation with national resolution authorities of participating member states.

For the first three months of next year it will operate as a transitional taskforce from the EU executive, after which it will take up its own premises in Brussels and become the only such self-financing agency based in the Belgian capital.

It will be run on operating contributions from the banking sector, with a budget estimated at €22 million for the first year.

The board will have broad powers to prepare for the resolution of stricken banks. Upon notification from the ECB that a bank is failing or likely to fail, the board will adopt a resolution scheme including relevant resolution tools and determine how much of the Single Resolution Fund should be used.

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