European Central Bank emphasizes resilience and reform in banking supervision

Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board, delivered an opening statement at the hearing of the Committee on Economic and Monetary Affairs of the European Parliament.

He noted that since 2021, European banks have demonstrated resilience through multiple shocks, including the COVID-19 pandemic, the war in Ukraine, and rising inflation. Strong capitalisation, coordinated supervisory measures, and proactive risk management contributed to this resilience.

He emphasized the importance of early vulnerability detection and decisive action to maintain financial stability and support economic cohesion.

Looking ahead to 2026-28, the ECB has set two main priorities:

• Strengthening resilience to geopolitical and macro-financial risks, including climate and physical risks.
• Ensuring operational resilience through cybersecurity, third-party risk management, and digitalisation, including risks from AI and crypto-assets.

The ECB is pursuing supervisory simplification to reduce complexity, improve efficiency, and focus on material risks. Reforms include risk-based approaches, proportionality, and digital tools, with the aim of maintaining high supervisory standards.

Additional efforts include advancing financial integration through completing banking union, establishing a European deposit insurance scheme, and supporting capital markets union initiatives. These measures aim to enhance resilience, reduce fragmentation, and improve competitiveness.

ECB Vice-President Luis de Guindos presented a report on supervisory simplification, which complements ongoing reforms. Elderson expressed commitment to completing these initiatives to ensure a resilient and competitive European banking sector.

He concluded by emphasizing the importance of early risk identification, decisive action, and maintaining a risk-based, proportionate, and simple supervisory framework to safeguard financial stability.

He also indicated willingness to continue his mandate as Vice-Chair to pursue these priorities and collaborate with the European Parliament.