Sabine Lautenschläger of ECB Speaks on Banking Supervision
Sabine Lautenschläger, member of the ECB Executive Board and Vice-Chair of the ECB Supervisory Board, spoke at the Eurofi Financial Forum, on banking supervision. She noted that, with regard to regulation and supervision, Europe has opted for less variety and more harmonization; for example, there is a single European rulebook for banks, a single European supervisor, and a single resolution mechanism. This helps to make banks safe and prepares the ground for a truly European banking sector.
However, she mentions the following less harmonized situations in Europe:
The first thing is the legal basis. Parts of Single Rulebook have been implemented through EU Directives that provide huge incentives to add as much national spice as possible. The rulebook also contains a number of options and discretions. These offer some freedom in applying the rules. As European banking supervisors, we have agreed to exercise many of these options and discretions in a harmonized manner. Still, there are some that lie in the hands of governments—these too need to be harmonized.
The second thing is the scope of supervision. There are very good reasons for supervising specific types of entity at European level. However, these entities are still subject to national supervision and national regulation. The most obvious examples are large investment firms with cross-border, bank-like activities and third-country branches of non-EU banks. In the wake of Brexit, many banks will decide to relocate from the UK to the euro area; they might choose to set up third-country branches. Meanwhile, investment firms might also relocate. Thus, it would make sense to regulate and supervise them at European level.
The third thing is the supervisors’ toolbox, which includes tools that are available in some countries but not in others. The moratorium tool is one example. It is crucial for handling bank failures in a safe way; so, it should become part of a harmonized European toolbox.
In the end she concluded, "There is still too much variety. To put it another way, there are too many differences when it comes to regulation and supervision in Europe. Such diversity can only be justified when it reflects country-specific risks. And that is not always the case. So, if we are serious about the banking union, we must strive for more harmonization."
Related Link: Speech
Keywords: Europe, Banking, Banking Supervision, Single Rulebook, ECB
Previous Article
OSFI Published Reporting Requirements for OSFI-525 and OSFI-590Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.