The Single Resolution Mechanism (SRM) became fully operational on 1 January 2016. The SRM implements the EU-wide Bank Recovery and Resolution Directive (BRRD) in the euro area. The full resolution powers of the Single Resolution Board (SRB) also apply as of 1 January 2016.

The SRM will bolster the resilience of the financial system and help avoid future crises by providing for the timely and effective resolution of cross-border and domestic banks. The EU has taken significant steps to address the root causes of the financial crisis, to ensure that banks are now much better capitalised and more effectively supervised and to identify risks that may be building in the system. But despite closer supervision and a greater emphasis on crisis prevention, there may still be cases of banks getting into difficulty. The SRM Regulation establishes the framework for Member States participating in the Banking Union when banks need to be resolved. Commissioner Jonathan Hill, responsible for Financial Stability, Financial Services and Capital Markets Union said: “The Banking Union already has the tools it needs to supervise the banks within the euro area. As of 1 January, the Single Resolution Mechanism is in place. This means that we now have a system for resolving banks and of paying for resolution so that taxpayers will be protected from having to bail out banks if they go bust. No longer will the mistakes of banks have to be borne on the shoulders of the many.”