Speaking at the Inauguration of the European Central Bank’s new supervisory responsibilities, Danièle Nouy, Chair of the Supervisory Board of the ECB, reflected on the origins of the Single Supervisory Mechanism, which she traced back to the hard lessons learned from the global financial crisis. She also commented on the unprecedented undertaking of setting up a new supervisory system in less than a year, while simultaneously conducting the comprehensive assessment. Ms Nouy stated that “the ECB was a perfect and natural home. No other institution could have offered better support for the creation of the SSM”.

Describing the SSM as the first supervisor “with a truly European mandate, which will impact the way we supervise the banking sector”, Ms Nouy argued that its set-up would allow for more benchmarking and peer comparisons. Ms Nouy then highlighted the need to address macro-prudential risks from a system-wide perspective. She noted that all of the moves to converge supervisory practices, such as the new Joint Supervisory Teams (JSTs) who base their supervisory decisions on the single European rulebook, would make little sense if the regulatory environment remained fragmented.

Looking ahead, the Chair of the European banking supervisory system called for reducing national discrepancies and pointed to the now famous report by Jacques de Larosière from 2009 in which he called for aligning financial regulation. “Our priority will be to tackle the most controversial national options, for instance regarding the definition of capital”, Ms Nouy added, before concluding that it was now time to focus on making this new system operate effectively to deliver supervision that is “tough and thorough”.