Initial legislation The SRM was enacted through a Regulation and an
Intergovernmental Agreement (IGA) which are titled: • Regulation of the European Parliament and of the Council establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Bank Resolution Fund and amending Regulation (EU) No 1093/2010 of the European Parliament and of the Council • Agreement on the transfer and mutualisation of contributions to the Single Resolution Fund. The European Commission argued that centralizing the resolution mechanism for the participating states will allow for more coordinated and timely decisions to be made on weak banks. Internal Market and Services Commissioner
Michel Barnier stated that "by ensuring that supervision and resolution are aligned at a central level, whilst involving all relevant national players, and backed by an appropriate resolution funding arrangement, it will allow bank crises to be managed more effectively in the banking union and contribute to breaking the link between sovereign crises and ailing banks." Critics have stated their concerns that this mechanism will result in sovereign states' taxpayers' money being used to pay off other nation's bank failures. The
European Parliament approved the Regulation on 15 April 2014, and the Council followed suit on 14 July, leading to its entry into force on 19 August 2014. The SRM automatically applies to all SSM members, and states which do not participate in the SSM cannot participate in the SRM. Some of the provisions of the Regulation were applied from 1 January 2015, but the authority to carry out
bank resolution did not apply until 1 January 2016, and were subject to the entry into force of the IGA.
Intergovernmental agreement The IGA was signed by 26
EU member states (all except Sweden and the United Kingdom, the latter which
withdrew from the EU) on 21 May 2014 and is open to accession to any other EU member states. It was to enter into force on the first day of the second month following the deposit of instruments of ratification by states representing at least 90% of the
weighted vote of SSM and SRM participating states, A sufficient number of participating Member States, surpassing the 90% voting share of participating member states required for entry into force, ratified the IGA by 30 November, allowing the SRB to take over full responsibility for bank resolution as planned on 1 January 2016. The only eurozone states which had not completed their ratification at the time were Greece and Luxembourg. Greece subsequently did so in December, while Luxembourg followed suit in February 2016. The ECB governing council decided on 24 June 2020 to establish a close cooperation agreement with the Bulgarian and Croatian central banks. The close cooperation agreements enter into force on 1 October 2020, at which point SRF agreement will apply to them. An updated
EMU reform plan issued in June 2015 by the five presidents of the council, European Commission, ECB, Eurogroup and European Parliament outlined a roadmap for integrating the Fiscal Compact and Single Resolution Fund agreement into the framework of EU law by June 2017, and the intergovernmental
European Stability Mechanism by 2025. Proposals by the
European Commission to incorporate the substance of the Fiscal Compact into EU law and create a
European Monetary Fund to replace the ESM were published in December 2017. On 30 November 2020 the finance ministers at the
Eurogroup agreed to amend the IGA and treaty establishing respectively the SRF and ESM. The reform proposal was blocked for months because of the veto of the Italian government. The ratification of the amendments by Member States is ongoing and, as of December 2023, Italy is the only Eurozone Member State that has not yet ratified the amendments. The proposed amendments include: • The establishment of the ESM as a "backstop" to the
Single Resolution Fund (SRF), through a revolving credit line. • Reform of the ESM Governance • Mandatory introduction of single-limb
collective action clauses (CACs) in new euro area sovereign bonds issued • Changes of eligibility criteria to the precautionary financial assistance instruments • Clarifications and expansions of the ESM mandate on economic governance; An amendment to the SRF Agreement (which would establish the ESM as a backstop to the SRF) was signed on 27 January 2021 by Member States, and its ratification is ongoing. As of June 2025, 22 states have ratified the amendment: among the 24 states that have ratified the intergovernmental agreement (IGA) enacting the SRM, only Italy and Czechia have not yet ratified the amendment. == Functioning ==