The next SSM term: supervisory challenges ahead

18-03-2019

Compared to the pre-SSM period, the European banking system appears today healthier and sounder. Capital ratios and asset quality have steadily improved. Capital ratios have become not only higher but also more comparable and reliable. Taking stock of these positive outcomes, the challenges for supervision in the future is to be able to foster financial integration and reconcile harmonisation with greater consideration of bank and country specificities. In this respect, we see positively an approach encouraging supervisory dialogue. Furthermore, supervisory requirements need to be simple, clear, and possibly stable to reduce uncertainty and the compliance costs of an overly demanding supervision. We also look forward to a model that does not let out of sight the very final goal of good supervision, that is favouring economic growth through a healthier and sounder banking system. Overall, we encourage more nuanced and less ‘one-size-fits-all’ supervisory decisions, supported by stronger empirical research to reduce the risk of unintended effects.

Compared to the pre-SSM period, the European banking system appears today healthier and sounder. Capital ratios and asset quality have steadily improved. Capital ratios have become not only higher but also more comparable and reliable. Taking stock of these positive outcomes, the challenges for supervision in the future is to be able to foster financial integration and reconcile harmonisation with greater consideration of bank and country specificities. In this respect, we see positively an approach encouraging supervisory dialogue. Furthermore, supervisory requirements need to be simple, clear, and possibly stable to reduce uncertainty and the compliance costs of an overly demanding supervision. We also look forward to a model that does not let out of sight the very final goal of good supervision, that is favouring economic growth through a healthier and sounder banking system. Overall, we encourage more nuanced and less ‘one-size-fits-all’ supervisory decisions, supported by stronger empirical research to reduce the risk of unintended effects.

Vanjski autor

B. Bruno, E. Carletti