The ECB directly supervises the significant banks in the euro area. To do so, we work together with the national supervisory authorities within the Single Supervisory Mechanism.

The less-significant banks are supervised by the national supervisory authorities while the ECB ensures a consistent approach across Europe.

Our objectives

Working together under the Single Supervisory Mechanism, the ECB and the national supervisors aim to

  • ensure the safety and soundness of the European banking system
  • increase financial integration and stability in Europe
  • ensure consistent supervision

Microprudential tools

Microprudential tools concentrate on challenging and testing the risks of individual banks. In this way, they contribute to a safe banking system in Europe.

The ECB has the power to:

  • carry out supervisory reviews, including stress tests
  • conduct on-site inspections and investigations
  • grant or withdraw banking licences
  • authorise banks’ acquisitions of qualifying holdings
  • ensure compliance with EU prudential rules
  • set higher capital requirements (“buffers”) in order to counter any financial risks
  • impose corrective measures and sanctions

Macroprudential tools

Macroprudential supervision refers to the overall approach taken to ensure the stability of Europe’s financial system by limiting the build-up of aggregate risk within the system.

The ECB can:

  • apply higher requirements for banks, such as counter-cyclical buffers
  • comment and object to measures by national authorities
ECB website: Financial stability and macroprudential policy