On November 20, the European Central Bank (ECB) published a speech given on November 18 by Yves Mersch, ECB executive board member, on the ECB’s perspective on current issues relating to the European banking union.

Among other things, Mr Mersch:

• Considers the comprehensive assessment of banks in the single supervisory mechanism (SSM) that will be  subject to direct ECB supervision;
• states that the stress test, which forms part of the comprehensive assessment, will be conducted by the ECB over  a period of three years, and that the ECB will use a baseline scenario and one stress scenario;
• comments that the ECB is currently discussing internally the question of how exposure to government bonds should be valued; and
• summarizes the ECB’s proposed supervisory approach to banks that will be subject to direct supervision (that is, banks deemed to be significant under the SSM Regulation (Regulation 1024/2013)) and to the other banks in the SSM.

The UK Prime Minister has stated that the UK will not participate in the SSM.  Speech.