The Chair of the ECB's Single Supervisory Mechanism (SSM), Andrea Enria, came to present his priorities to the European Parliament's Committee on Economic and Monetary Affairs (ECON) and once again stressed the need to prepare for Brexit.
“We have also been continuing to monitor banks’ preparedness for Brexit, as the likelihood of a no-deal scenario remains a concern for us (…) Banks should now speed up the implementation of their Brexit plans so as to be fully prepared in the event of a hard Brexit at the end of October”, he said.
The ECB and the national supervisory authorities have had direct discussions with the banks and stressed from the outset that banks should be prepared for all possible contingencies, he said.
With regard to the SSM's priorities, the completion of the post-crisis repair process will remain at the top of the agenda, as will the monitoring of emerging risks and low profitability factors for European banks.
Asked by Danuta Hübner (EPP, Poland) about the risks to the European banking system, the Italian acknowledged that there was a concentration of risks in two sectors to which particular attention should be paid in the future, namely governance and operational risks.
MEPs also asked him about the enlargement of the Banking Union to include Croatia and Bulgaria, which have submitted their applications for membership of the European Exchange Rate Mechanism (ERM-2). The full assessment for Bulgaria has been completed and has identified two banks with a capital gap to be filled, he explained, while for Croatia the assessment is expected to start in September.
Money laundering. The former President of the European Banking Authority (EBA) also called for greater harmonisation of the European framework for combating money laundering. The ECB is working closely with the EBA and national prudential supervision and anti-money laundering authorities to implement the tasks set out in the EU Council's Action Plan (see EUROPE 12146/26), he assured MEPs.
Finally, when asked by Stefan Berger (EPP, Germany) about the ECB's creation of a stable European currency as a reliable alternative to projects such as Facebook's Libra (see EUROPE 12299/11), Mr Enria agreed with Yves Mersch, member of the ECB's Executive Board, who spoke on Monday (see EUROPE 12318/9) on this subject.
“From the supervisory side, my main focus is on the compatibility with the regulatory framework. When I was at EBA we made an analysis of the risks of cryptocurrencies and we came to the conclusion that first and foremost you need to extend AML controls to cryptocurrency”, he explained. (Original version in French by Marion Fontana)