Danièle Nouy of ECB on Benefits of Moving Toward A Single Jurisdiction
Danièle Nouy of ECB spoke at the ACPR Conference and emphasized that moving toward a single jurisdiction will help address the challenges being faced by the European banks and banking systems. She reiterated that the Banking Union and the Single Supervisory Mechanism (SSM) must progress further to become a single jurisdiction and outlined how a single jurisdiction can help manage the existing challenges. Finally, she listed actions that could facilitate improvements in the way things are being done.
Ms. Nouy discussed that the Banking Union requires harmonization of options and national discretions; cross-border cooperation, including cross-border waivers for solvency, liquidity, and large exposures; and solidarity, as embodied by a European deposit insurance scheme, or EDIS. With respect to the current low profitability of banks, she suggested that a larger market, in which banks are able to consolidate across borders, would help to get the banking sector back in shape. It would also put European banks in a better position to serve large European companies and to compete successfully with other global financial actors. She added that this European consolidation will not necessarily result in certain banks becoming too big to fail because they might be too big to fail for a single country, but not for the entire euro area.
Another challenge that Banking Union can help meet is Brexit. "Banking Union makes it much easier to welcome safe and efficient banks that want to relocate—not only banks from the United Kingdom, but also from other countries, as in the case of Nordea, which is moving from Sweden to Finland. And this is not just true for single banks; it is also true for entire banking systems, such as that of Bulgaria, that might join the SSM through close cooperation." She added that the SSM needs to be an agile supervisory authority that cooperates perfectly with the other European institutions and is respected by its global peers. To this end, the following are the things that can be done better:
- Improvements in decision making—real delegation of powers, embedded in the SSM framework, would be a huge help
- Further simplify processes—not least to avoid duplication of work between the national supervisors and ECB
- Awareness that, in the euro area, bank supervisors now have a European mandate, regardless of whether they work in Paris, Frankfurt, Brussels, or Madrid
- Fostering the exchange of information and experiences between the national supervisors and ECB
Related Link: Speech
Keywords: Europe, EU, Banking, SSM, Single EU Jurisdiction, EDIS, Banking Union, ECB
Related 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.
