Chapter 1, entitled “The Systemof Rules and Layers of Regulation”, makes the necessary bridge to Volume I by highlighting the key novel elements in EU banking law which were introduced after its cut-off date (December 2022). It also guides the reader on how the following Chapters are structured within the prudential and the crisis prevention and management framework and develops on some generic, key aspects of EU banking law, namely, the layers of regulation (‘level 1’, ‘level 2’, and ‘level 3’ acts) and the national options and discretions (O&Ds) granted to Member States, and to supervisory and resolution authorities. Particular emphasis is given to the classification of credit institutions in various categories for supervisory and regulatory purposes, and to the provisions of Article 4(3) of the Single Supervisory Mechanism Regulation (SSMR) on the application of national law by the European Central Bank (ECB) within the Single Supervisory Mechanism (SSM).