The European Central Bank's centralised application of national law under the Single Supervisory Mechanism: a rule of law analysis

A decade ago, the competence to supervise Eurozone banks was given to the European Central Bank (ECB). However, the applicable substantive rules remain largely enshrined in national law. One of the consequences of this ‘mismatch’ is that the ECB has become competent to apply national (banking) law. This somewhat peculiar competence gave rise to a new European Union administration model and, consequently, brought about a host of constitutional questions. This study asks what challenges to the rule of law arise from the ECB’s mandate to apply national law, and whether they can be addressed within the current European Union Treaty framework. It examines the ECB’s mandate from the perspective of different rule of law principles and establishes, firstly, that certain administrative practices of the ECB do not sit well with the principle of conferral. Secondly, it concludes that in order for the ECB to comply with the principle of legality of the administration, the Court of Justice of the European Union should reconsider the way it applies certain judicial doctrines, such as the Costanzo and the direct effect doctrines. And, finally, this research establishes that only by actively involving national courts in the proceedings can the EU Courts ensure effective judicial protection against ECB decisions based on national law.