Accountability of the ECB's Single Supervisory Mechanism: Evolving and Responsive

Abstract

This paper develops a theory of accountability as a means of increasing regulatory effectiveness in complex policy environments and applies it to the supervisory powers that have been assigned to the European Central Bank through the Single Supervisory Mechanism. It finds that the use of the SSM by the ECB has been evolving. The SSM/ECB has expanded and improved the information it provides to other EU institutions and the public and has progressively elaborated the explanation of its decisions and regulatory instruments. These developments are welcome because they are indications of an accountable institution that seeks to demonstrate how its actions meet its obligations. However, there is still lack of a performance benchmark against which the actions of the SSM/ECB can be evaluated and of expert review of SSM/ECB decisions. In complex policy environments, it is not possible for outsiders to assess the soundness of regulatory actions without access to confidential information. Therefore, this paper proposes that the European Parliament establishes a policy or regulatory audit by external experts who can assess such information on a confidential basis.

Keywords: Accountability, ECB, SSM, Supervision, Regulation