ECB published its annual report for 2018, which discusses the work of ECB in the year under review. The ECB Vice President Luis de Guindos presented this annual report to the Committee on Economic and Monetary Affairs in Brussels. In his remarks, he discussed key issues on the European financial agenda. ECB also published the feedback on the input provided by the European Parliament, as part of its resolution on the ECB Annual Report for 2017.
Based on the report, the key contributions of ECB included the following:
- The financial stability environment in 2018. The financial stability environment became more challenging in 2018 and this was reflected in systemic stress indicators. The analysis in 2018 highlighted that some developments supported financial stability, including a continued economic expansion and improved bank resilience. In EU, growing uncertainties related to the Brexit process and stress in the Italian bond markets contributed to higher political and policy uncertainty.
- Macro-prudential policy function. In response to the risk environment confronting the euro area in 2018, national authorities, in consultation with ECB, implemented a number of macro-prudential measures to mitigate and build up resilience to systemic risks and to ensure that financial services continue to be provided effectively to the real economy. In 2018, ECB continued its extensive efforts in the field of macro-prudential policy, making an important contribution to preserving financial stability. In line with its legal mandate, ECB, in 2018, assessed notifications by the national authorities in the euro area of 103 macro-prudential policy decisions regarding instruments targeting cyclical and structural systemic risks as well as other instruments under Article 458 of the Capital Requirements Regulation (CRR). Most notifications related to the setting of countercyclical capital buffers (CCyBs), or the identification of global and other systemically important institutions (G-SIIs and O-SIIs) and the calibration of their capital buffers
- Micro-prudential activities to ensure the soundness of individual banks. Throughout 2018, the ECB Banking Supervision continued to contribute to a stable European banking sector and a level playing field for all banks in the euro area. In 2018, ECB Banking Supervision finalized and published a thematic review on profitability and business models. The review found that the situation differs widely across banks. In March 2017 ECB Banking Supervision had published qualitative guidance on how to deal with NPLs. This guidance was supplemented in March 2018 by an addendum, which specifies the expectations for the provisioning of new NPLs. The ECB Banking Supervision continued improving its tools and methods. Following public consultations (launched in March 2018), ECB Banking Supervision published, in November 2018, the final guides for banks on their internal capital and liquidity management (the Internal Capital Adequacy Assessment Process, or ICAAP, and the Internal Liquidity Adequacy Assessment Process, or ILAAP).
- ECB contribution to strengthening the Banking Union and the Capital Markets Union. In 2018, ECB continued to contribute to the ongoing discussions on completing the Banking Union and the Capital Markets Union. Establishing a common backstop to the Single Resolution Fund and a European Deposit Insurance Scheme will facilitate deeper financial integration and increase credibility of the Banking Union. ECB also contributed to the joint monitoring report on risk reduction, prepared along with EC and SRB, which provided an updated assessment of how risks are evolving within the banking union. ECB, in 2018, highlighted the importance of developing tools to mitigate risks in the non-bank financial sector. For instance, EU legislators should introduce macro-prudential tools designed to address systemic risks related to liquidity mismatches and the use of leverage in investment funds.
- Notification (PDF)
- Annual Report (PDF)
- Speech of ECB Vice President
- Feedback on Input of Parliament (PDF)
Keywords: Europe, EU, Banking, Annual Report, Micro-Prudential Policy, Macro-Prudential Policy, Financial Stability, Supervisory Activities, Banking Union, ECB
Previous ArticleCFTC Publishes Amendments to Comparability Determination for Japan
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.