The Single Supervisory Mechanism (SSM), the first pillar of the banking union, became operational on 4 November 2014. It entrusts the ECB with the supervision of significant institutions, ending the fragmentation of banking supervision among national authorities.

The 2008-2012 financial crisis revealed the vicious circle between bank debt and sovereign debt, prompting European states to mobilise approximately €1,600 billion to rescue failing institutions. This situation motivated the creation of the European banking union to break this harmful link.

Bail-in requires shareholders and creditors to absorb losses amounting to at least 8% of total liabilities before any recourse to mutualised resources. This protects the Single Resolution Fund and prevents premature use.

The European Deposit Insurance Scheme project remains blocked by political disagreements. Directive 2014/49/EU harmonises national schemes but does not constitute a complete European system. Loss mutualisation is not yet effective.

In 2024-2025, 116 significant banks were under direct ECB supervision. These banks represent over €20 trillion in assets, demonstrating the strategic importance of this supervision.

Elements can be classified according to their role in the banking union: supervision, resolution, or deposit guarantee. For example, the ECB is responsible for supervision, while the Single Resolution Board handles failures.

The ECB directly supervises banks classified as significant according to several criteria, including total assets exceeding €30 billion. However, other criteria include assets representing more than 20% of national GDP with a minimum of €5 billion, or being among the three largest institutions in a member state.

The Single Resolution Mechanism (SRM) became operational on 1 January 2016. It establishes a common framework for the orderly management of bank failures, with the Single Resolution Board based in Brussels.