University of Twente Student Theses


The Future of a Hybrid Mechanism : The Case of the Single Supervisory Mechanism

Brauss, Hanns Bernhard Reinhard (2014) The Future of a Hybrid Mechanism : The Case of the Single Supervisory Mechanism.

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Abstract:The Single Supervisory Mechanism, first component of the EU's Banking Union, represents an important step in revising the supervision system in the EU's financial sector and European integration. It aims to break the vicious circle that impacted the European economies heavily during the sovereign debt crisis. Interestingly, the Mechanism was created as a hybrid of supranational and national components and actors. Although supervisory powers were pooled at the ECB, the national competent authorities are also included. This set-up leaves room for questions looking at the future development of the Mechanism, either able to go beyond the will of the member states or effectively remain under national control. Derived from this general interest the primary research question asks “What is the relative power of the supranational and the national side within the Single Supervisory Mechanism?” (RQ1). The analysis is carried out as a Congruence Analysis within the theoretical framework of the two prominent European integration theories: Neo-Functionalism (NF) and Liberal Intergovernmentalism (LI). Both offer opposed views on integration: NF focuses on how the demand for integration is created and deems the supranational actors and underlying mechanisms responsible. LI highlights the role of the member states, supplying integration. The thesis has two objectives, on the one hand to explore the possibilities for the future development of the SSM, and providing evidence for the applicability of the theories and their relative potential to explain the evolving integration of the European financial sector, on the other. To enable conclusions to be drawn on RQ1 the sub-research question is “Which European Integration theory is better suited to explain the integration process in the European Union's financial supervision sector, and the establishment of the Single Supervisory Mechanism?“ (sRQ). The analysis of the negotiation process and the final output shows that Liberal Intergovernmentalism seems to be better suited to explain integration in the financial supervision sector. The influence of the supranational side was rather limited, as the national side remains influential even after the creation of the SSM influencing the scope and scale of the SSM's possible development. Still, to ensure a proper functioning and effective Mechanism, the ECB was equipped with rather strong competences. The relationship between the ECB, as the central actor of the SSM, and the NCAs will largely determine the future development and the success of the Mechanism. The ECB has to be careful to decide when to interfere at the national level of supervision.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:70 social sciences in general
Programme:European Studies MSc (69303)
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