The role of the European Central Bank in ensuring the financial stability of the EUAbstract
The Declaration of the Heads of State and Government of June 29, 2012 was the birth of the European Banking Union. It demonstrated considerable and, in some ways, unprecedented support by the member states of the European Union to each other. This move was highly questioned by the public. In addition to eloquent statements about the need to break the adverse interdependence of sovereign risks and risks of the banking sector, this Declaration included two specific legal obligations. Firstly, the creation of the Single Supervisory Mechanism (SSM) and the centralized supervision of the banking sector of the Member States of the eurozone with supervisory powers transferred to the European Central Bank in accordance with Article 127 (6) of the Treaty on the functioning of the EU. Secondly, the direct recapitalization of banks from the European Financial Stability Facility (EFSF), established under the European Stability Mechanism (ESM) based on the Treaty, signed a few months earlier — February 2, 2012. The fulfilment of these obligations directly depends on the effective work of the European Central Bank (ECB). That is why the formation of the EU Banking Union and its current activities are inextricably linked with the efficiency of the ECB. EU member states gave the ECB a certain credit of confidence by giving up part of their mandates and transferring powers to a supranational level in the hope that the ECB has sufficient resources and experience to increase the transparency, stability and security of the EU banking sector.