The single resolution mechanism : introduction to resolution planning

In force from January 2015, the Single Resolution Mechanism (SRM) is the new system of bank resolution comprising the Single Resolution Board (SRB) and National Resolution Authorities of the participating Member States of the Banking Union (NRAs) (see Figure 1). The SRM constitutes one of the pillars of the Banking Union. It complements the Single Supervisory Mechanism (SSM), the unified system of banking supervision in the Banking Union. The SSM and the SRM aim to ensure the banking system in the Banking Union is safer. The SRM's mission is to ensure an orderly resolution of failing banks and banking groups (hereafter 'banks'), with minimum impact on the real economy and public finances of the participating Member States of the Banking Union. Responsibilities are allocated among the SRB and the NRAs, as set out in the SRM Regulation (SRMR). The role of the SRB and the NRAs is not limited to crisis situations, but is primarily focused on planning and preparatory measures, such as drawing up resolution plans, setting appropriate levels of Minimum Requirements for own funds and Eligible Liabilities (MREL), and addressing impediments to resolvability. A resolution plan comprises a comprehensive description of credible and feasible resolution actions which the SRM may implement if a bank meets the conditions for resolution.