As a result of the establishment of the Single Supervisory Mechanism (‘SSM’), the European Central Bank (‘ECB’) was vested with significant supervisory tasks in the prudential field. The ECB exercises these tasks with a view to contributing to the safety and soundness of credit institutions and the stability of the financial system. Besides these objectives, the ECB is also subject to a duty of care regarding the unity and integrity of the internal market when exercising its tasks. The fact that the ECB has been vested with this duty is noteworthy. It is neither obvious why the ECB ought to be subject to this special duty, nor is it clear what this duty precisely entails.
In my paper, ‘The European Central Bank’s Duty of Care for the Unity and Integrity of the Internal Market’, I take a closer look at the content of this duty, as well as its raison d’être. While EU administrations have long been subject to duty of care obligations, the duty of care for the unity and integrity of the internal market is an entirely new principle. The paper assesses its raison d’être in light of the functional and geographical scope of prudential supervision in the EU. While sound supervision contributes to ensuring that the single market functions properly, by promoting confidence and stability, the paper demonstrates how the toolkit of prudential supervisors has the potential to disrupt the internal market. Moreover, it shows why the issue of disruptions has added significance in the case of the SSM: the SSM is part of the Banking Union, but the scope of the SSM, or the Banking Union for that matter, does not match the scope of the internal market, which extends to the EU as a whole. For actors such as the UK, which is not part of the SSM (but is still part of the EU), the empowerment of the ECB risks being double-edged as a result: notwithstanding the benefits of a Banking Union, the ECB/SSM might in the future fail to internalize the cost of its actions which might come to affect, via disruptions to the internal market, the interests of non-SSM states in the internal market.
The paper goes on to assess the content of the ECB’s duty of care. One of the troubling aspects of this new principle is that neither EU policy-makers nor the ECB appear to have given much thought to what it actually means and what it actually entails. Likewise, very little thought has been given to how the duty of care relates to the ECB’s statutory objectives. This point is worth noting since the ECB, when performing its prudential tasks, must do so with a view to discharging these objectives. To make progress, the paper seeks first to deconstruct the concept of a duty of care, after which it reconstructs it with regard to the unity and integrity of the internal market. In this process, it seeks to differentiate the latter duty from the duty of care (or duty of diligence) principle that the European Court of Justice applies to EU administrations in its case law, arguing that the two are conceptually distinct. The main message of the paper is that the ECB’s duty of care for the unity and integrity of the internal market is effectively ‘conduct-focused’. As a consequence, it rejects the idea that it commits the ECB to securing the unity/integrity of the internal market. It concludes on a normative note by offering suggestions on how the ECB ought to discharge this duty.
Pierre Schammo is a Reader in Law at Durham University, School of Law. He is a visiting senior fellow at the European Institute, London School of Economics and Political Science.