European Banking Union and the Meroni Doctrine

Abstract

European Banking Union has the two pillars of a Single Supervisory Mechanism (SSM) and a Single Resolution Mechanism (SRM) with some harmonisation of relevant national laws, but no common Deposit Guarantee Scheme due to political difficulties.
SSM and SRM need a legal base. It is Article 127 (6) TFEU for SSM and Article 114 TFEU for SRM. Both articles have been overshadowed by the Meroni doctrine established by the European Court of Justice (ECJ) in 1956, which decided that EU institutions may not delegate to agencies powers with a wide discretion.
The Commission, as the initiator of EU legislation, has considered that Meroni is applied not only to “administration-to-administration” relationship but also to “legislature-to-administration” relationship. As a consequence, in the framework of SSM, in order to avoid Meroni being applied, banking supervisory powers are given to the ECB, an institution of the EU, not to the European Banking Authority (EBA) or a new regulatory agency. On the other hand, in the framework of the draft SRM regulation, also in order to escape the application of Meroni, the Commission gives resolution powers to itself, not to a Single Resolution Board, whose tasks remain recommendation and execution.
But, the author thinks that there is a fallacy in the Commission’s interpretation of Meroni, since, in the ESMA judgment (C-207/12), the ECJ has modified the doctrine in that discretionary powers may be delegated to EU agencies provided that the conditions for their exercise are clearly delineated by the EU legislature. Therefore, Meroni should be considered to be applied to “legislature-to-administration” relationship with parliamentary and judiciary control.
Conseguently, firstly, banking supervisory powers could be given to the EBA or a newly established agency in stead of ECB. Secondly, resolution powers could be given directly to a Single Resolution Board.