On Monday 13 October, Claudia Buch, Chairwoman of the ECB’s Single Supervisory Mechanism (SSM), spoke out in favour of greater integration of the European banking market in order to stimulate competition and promote regulatory simplification.
“The current challenges call for more Europe, not less”, said Mrs Buch during a dialogue with the European Parliament’s Committee on Economic and Monetary Affairs. In her view, “harmonising national rules would significantly improve integration, strengthen competition” and be “a key driver of simplification”.
You should pass on this message to the Council of the European Union! - immediately reacted Markus Ferber (EPP, German).
Following the agreement between Parliament and EU Council representatives on the ‘CMDI’ legislative package aimed at strengthening the management of a banking crisis (see EUROPE 13668/10), Mrs Buch called for progress to be made in setting up the ‘EDIS’ bank deposit guarantee scheme.
“A credible collective safety net would reduce the risk of destabilising deposit outflows in times of stress, weaken the sovereign-bank nexus and promote the integration of European banking markets”, she said.
Simplification. Ľudovít Ódor (Renew Europe, Slovakian), who was chairing the session on an exceptional basis, asked the Chair of the SSM about the work underway within the ECB on regulatory simplification, and in particular about the existing number of regulatory reserves (‘cash buffers’) required by European legislation.
“One should take into account the objectives and the targets of the individual capital buffers we have in the system”, said Mrs Buch, arguing to have “clear delineation for microprudential and macroprudential tools because they simply serve different purposes”.
Asked by Ludek Niedermayer (EPP, Czech) whether the deteriorating budgetary situation in some EU countries could have an impact on the solidity of the banking system, Mrs Buch reported that progress had been made in weakening the links between banks and sovereign States, even if the exposure of the former to the latter remains. She noted that during macroeconomic shocks, such as the Covid-19 pandemic and the energy crisis, it was fiscal policy that had absorbed the shocks.
Presenting the results of the 2025 banking stress tests (see EUROPE 13693/10) to MEPs, she noted that if the adverse scenario were to materialise, the level of the Common Equity Tier (CET 1) would fall by an average of 16% to 12%. Only 24 banks will face restrictions on the distribution of dividends, compared with 53 banks in the 2023 financial year.
On this basis, Mrs Buch spoke of banking supervision that is more closely geared to the risks incurred by financial institutions. And she announced that the next stress test would identify new emerging risks, citing “the growing importance of stablecoins and non-bank financial intermediation”.
Read Claudia Buch’s speech to Parliament: https://aeur.eu/f/ixk (Original version in French by Mathieu Bion)