Has banking union stood the test of time?

17 August 2022

On 23 and 24 June, ECB Banking Supervision joined forces with the Single Resolution Board (SRB) to hold their first joint conference entitled “The test of time: banking union a decade on”. At this conference, held in hybrid format, speakers and participants took stock of the banking union while looking to the future.

The conference was opened by Supervisory Board Chair Andrea Enria, who emphasised the close and effective collaboration between the ECB and SRB, saying that “the unified European response to the challenges of recent years would have been unthinkable without the banking union.” In a keynote speech, EU Commissioner Mairead McGuiness highlighted achievements over the past ten years but cautioned that “there is a lot of work which we need to do, and we need to do it together.”

Work needs to be done in particular on the missing third pillar of the banking union, a European deposit insurance scheme, which was discussed in the first panel “Moving crisis management forward”. Panellists expressed disappointment about the little political movement on this front but agreed that also other aspects could be further developed and implemented to improve Europe’s crisis management framework – while keeping the trust of depositors. Trust was said to be the main ingredient for any deposit guarantee scheme, without which none could be viably maintained.

The second panel called “Banking 2040 - a look ahead” featured speakers with backgrounds in fintech, consulting and innovation. It gave a glimpse of what banking in the future could look like: data-driven and digitally based was the clear consensus. Alongside a fast-changing and innovative environment, banks are likely to face people-centric challenges, such as the tug-of-war for talent or the need to strengthen customer relationships.

The second day of the conference began with views from the banking sector. KBC Group CEO Johan Thijs lauded the progress made in integration in the areas of supervision and resolution, while making the point that institutional demands and processes can weigh on banks. The last panel on “Operational resilience – are banks prepared for the worst?” saw a lively discussion on what was needed to steel the banking sector and to protect financial stability against known risks in relation to credit, climate change and cybersecurity, and against uncertain risks related to economic growth, inflation and sovereign debt. In her closing remarks, SRB Chair Elke König recalled the achievements of the banking union and highlighted that communication and collaboration across authorities has come a long way. Looking to the future, she concluded that “there is much hard work on the road ahead in order to get the balance right between allowing space for innovation in the banking sector, while also ensuring that we have proper, up-to-date regulatory measures to ensure we can deal with any hiccups.”

Take a look at the photos from the event and watch the recordings.