Supervising banks' health: ECB accountability and transparency

The European Central Bank (ECB) is accountable to the European Parliament when exercising its power of European banking supervision.

ACT

Interinstitutional Agreement 2013/694/EU between the European Parliament and the European Central Bank on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the ECB within the framework of the Single Supervisory Mechanism.

SUMMARY

The ECB, as the supervisor of Eurozone banks, has an obligation to be transparent and accountable to the European Parliament (EP). The new task has been assigned to it in response to the 2008 crisis in order to ensure European banking supervision is less dependent on national considerations (for further details, refer to EU legislation establishing a ‘single supervisory mechanism’).

This is key for the legitimacy of its supervisory role. It is the first time substantial powers to supervise banks have been transferred from national to European level. Decisions can be very sensitive since they assess banks’ financial health. For instance, the ECB can require a bank to hold more capital.

By contrast, the ECB remains fully independent when exercising its initial role of being responsible for monetary policy in the Eurozone. Here, the main objective is to ensure price stability.

The practicalities governing the democratic oversight of the ECB’s new supervisory task by the EP are set out in an interinstitutional agreement reached between both institutions in 2013. The key elements are:

The ECB has to appear regularly at public hearings before the EP. Both institutions can hold oral discussions behind closed doors. In this case, the participants are subject to confidentiality requirements. The ECB has to submit a report on the execution of its new supervisory task to the EP every year.

The ECB provides the EP with a comprehensive and meaningful record of discussions at meetings of the ECB’s supervisory board.

The EP can launch investigations into possible mistakes by the ECB when exercising its supervisory task. In that situation, the ECB has to cooperate fully with the EP.

The EP is involved in the appointments of the Chair and the Vice-Chair of the ECB’s supervisory board.

RELATED ACT

Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013).

Last updated: 15.06.2014