towards a banking union panel i are growth and stability compatible
Download
Skip this Video
Download Presentation
Towards a Banking Union - Panel I: Are growth and stability compatible? -

Loading in 2 Seconds...

play fullscreen
1 / 10

Towards a Banking Union - Panel I: Are growth and stability compatible? - - PowerPoint PPT Presentation


  • 93 Views
  • Uploaded on

Towards a Banking Union - Panel I: Are growth and stability compatible? -. Steven Keuning Director General HR, Budget and Organisation 20 March 2013. Outline. Relevant to EU/EMU: compatibility of growth, financial stability… and financial integration

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Towards a Banking Union - Panel I: Are growth and stability compatible? -' - orrin


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
towards a banking union panel i are growth and stability compatible

Towards a Banking Union- Panel I: Are growth and stability compatible? -

Steven KeuningDirector General HR, Budget and Organisation

20 March 2013

outline
Outline
  • Relevant to EU/EMU: compatibility of growth, financial stability… and financial integration
  • Supervisory lessons from the financial crisis
  • Rationale for Single Supervisory Mechanism (SSM)
  • State-of-play to establish the SSM
  • SSM: Guiding Principles
  • SSM: Key Success Factors
  • SSM: Challenges & Opportunities
  • (SSM)
slide3

Relevant to EU/EMU: compatibility of growth, financial stability … and financial integration

  • Financial integration implies:
  • Cheaper and easier cross-border payments
  • Larger variety of financial products available at lower cost (loans) or higher remuneration (e.g. internet deposit accounts)
  • More buyers and sellers on larger financial markets
  • Enhanced transmission of monetary policy decisions
  • Yet: possibly also more cross-country distress contagion and larger impact of excessive risk-taking  strengthening European supervision
slide4

Supervisory lessons from the financial crisis

    • Willingness to actin a timely and adequately strict fashion
    • Need to test resilience to (truly) adverse stress test scenarios
    • Need for independent supervision, avoiding local ‘capture’
    • Strongerrisk-based capital and liquidity requirements
    • More focus on verification and monitoring of compliance with best risk management and internal control practices
  • Cross-border dimension is crucial
    • Minimisation of home-host conflicts of interest (in a crisis)
    • Harmonisation of risk and asset quality assessment
  • Stronger interplay between micro- and macro-prudential supervision (early macro-warnings, spotting contagion risks)
rationale for single supervisory mechanism
Rationale for Single Supervisory Mechanism

Single Supervisory Mechanism (SSM) essential to:

  • Promote sustainable growth through financial integration while containing financial instability (e.g. cross-border contagion)
  • ImproveEMU functioning: smooth monetary policy transmission and functioning of money markets; containing imbalances
  • Helpbreaking negative feedback loops between governments and banks (together with the Single Resolution Mechanism)
  • Remove any national biasof national supervisory authorities
  • Converge to the best (of the national) supervisory practices
  • Substantially reduce the supervisory ‘burden’ for cross-border banks (through the Single SSM Supervisory Manual)
  • Reduce (crisis) coordination failures among national supervisors
  • Promote reinforced coordination by European Banking Authority
state of play to establish the ssm
State-of-play to establish the SSM
  • 13 December 2012: ECOFIN Agreement on SSM Regulation
  • Trilogue with the European Parliament (including the EBA regulation) expected to be concluded in a few weeks
  • Adoption of the SSM Regulation by the Council and Parliament in early summer, with a possible publication and entry into force in the course of July
  • ECB decisions on SSM (organisation, staffing, location, recruitment) only after entry into force of SSM Regulation; preparation started
  • SSM begins supervision one year after entry into force
ssm guiding principles
SSM: Guiding Principles
  • Effective single supervisory authority within the ECB (including macro-prudential powers, legal competence for all credit institutions)
  • Independent and accountable
  • Separationbetween ECB’s supervision and monetary policy responsibilities (e.g. decision-making by Supervisory Board)
  • Establishment as a System, with participation of National Competent Authorities (NCAs), and not a ‘college’ of NCAs
  • Leverage NCAs expertise (convergence towards the best national practices, ECB to directly supervise only (about 140) systemic banks)
  • Financing by supervised entities (level playing field across SSM)
ssm key success factors
SSM: Key Success Factors
  • Ensure full and smooth cooperation between ECB and NCAs (Joint supervisory teams; strong horizontal functions)
  • Homogeneous approach to risk and asset quality assessment and supervisory requirements (e.g. Single SSM Supervisory Manual, reporting)
  • Strong on- and off-site supervision
  • Effective workflow management and well-functioning IT-systems
  • Smooth management of the transition period
ssm challenges opportunities
SSM: Challenges & Opportunities
  • Time (only 18 months to set up SSM versus 4 years to set up ECB)
  • All SSM institutions’ alignment towards a truly European system, with effective reporting lines and commitment of resources
  • Utilise national experience and skills, while developing the ECB’s horizontal and specialised expertise (e.g. risks’ assessment)
  • Unlike monetary policy, there is no well-defined single overall objective; more visibility of ECB towards national public opinion
  • Reap synergiesbetween ECB’s ‘central banking’ functions (analytical capacity) and its macro- and micro-prudential supervision tasks
  • Staff recruitment, (regular) relocation (language issues?), training
  • A smooth, yet rapid transition (continuity without entrenching national approaches; balance sheet assessment)
  • Unified supervision needs a common resolution mechanism
towards a banking union panel i are growth and stability compatible1

Towards a Banking Union- Panel I: Are growth and stability compatible? -

Steven KeuningDirector General HR, Budget and Organisation

20 March 2013

ad