The Banking Union and its supervisory arm, the Single Supervisory Mechanism (SSM), represented a key step from both a European integration perspective, as a means to tackle the sovereign-bank doom loop, and also from an international one, since the European Central Bank (ECB) is the first supranational banking supervisor worldwide. Despite the post-crisis consensus that fostered the launching of the mechanism, now that it has been operating for more than three years, it is possible to concretely evaluate supervisory practices under diverse institutional settings. This is of fundamental importance in light of the singular relationship between the ECB and the National Competent Authorities (NCAs), and the fact that one of the most ambitious objectives of the SSM is establishing a “common supervisory culture”. The paper examines the limits and challenges stemming from the harmonization of both applicable regulations and supervisors’ tools. In this regard, the aim of the paper is to (1) identify pivotal risks arising from the use of the common toolbox, which was conceived as a means to simplify supervisors’ tasks but might have unintended consequences when banking reality does not conform to the ideal template, and (2) assess shortcomings emerging from cross-border missions, whose long-term objective of exchanging best practices across jurisdictions has to be balanced against latent political frictions amongst national authorities. The claim is that harmonization has the potential to backfire in concrete scenarios, but it is nonetheless necessary since it helps frame supervisory tasks in a more coherent way. From a theoretical perspective, it is argued that in order to enhance understanding of harmonization in practice, the traditional principal-agent analysis commonly applied to ECB-NCAs relationships needs to be complemented by social learning and norm diffusion approaches, which provide a more comprehensive framework to critically assess the possibility of achieving a common supervisory culture.
