The ECB has developed a common methodology for the Supervisory Review and Evaluation Process (SREP) to which financial institutions will have to adapt.
The ECB took over as supervisor of financial institutions in the Eurozone in November 2014, as part of the Single Supervisory Mechanism (SSM).
The SSM is responsible for the prudential supervision of all credit institutions within the participating Member States. It guarantees that the EU prudential supervision policy is applied consistently and efficiently across all credit institution. It also ensures that these institutions are subject to a high quality supervision.
The three main objectives of the SSM are to:
- Ensure the safety and soundness of the European banking system.
- Increase financial integration and stability.
- Ensure consistent supervision.
In order to accomplish these objectives, the ECB is developing rules, procedures and methodologies that will constitute the institutions’ supervisory tools. Specifically, the ECB has developed a common methodology for the development of the Supervisory Review and Evaluation Process (SREP), through which the systems, strategies, processes and mechanisms implemented by entities will be reviewed.
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