The European Commission (Commission) has published a communication that sets the single supervisory mechanism in context and indicates further work towards a banking union beyond initial proposals that relate to this entity. This communication also accompanies two legislative proposals, respectively for the setting up of a single supervisory mechanism by conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions and for adaptations to the Regulation setting up the European Banking Authority.

The Commission proposed the establishment of a single resolution mechanism which would govern the resolution of banks and coordinate in particular the application of resolution tools to banks within the banking union. The resolution scheme would take its decisions in line with the principles of resolution set out in the single rulebook which are consistent with international best practice and in full compliance with European Union state aid rules. In particular shareholders and creditors should bear the costs of resolution before any external funding is granted, and private sector solutions should be found instead of using taxpayers' money. Moreover, and based on an assessment of its functioning, such a single resolution mechanism could also be entrusted with further tasks of coordination regarding the management of crisis situations and resolution tools in the banking sector.