Ten years of European banking supervision
13 November 2024
In marking the 10-year anniversary of the Single Supervisory Mechanism (SSM), supervisory and finance officials as well as industry stakeholders shared their thoughts about the achievements and challenges of European banking supervision.
Christine Lagarde
President of the European Central Bank
“A decade ago, we embarked on a journey to establish European supervision to address the vulnerabilities exposed by the financial crisis and complete our monetary union. It was a bold step, born out of necessity and vision. Ten years later, it is clear that European banking supervision has not only met, but exceeded, our expectations.
As we look ahead to the next decade, we must harness this same determination and energy. Our aim is clear: to ensure that European banks are in an even better position to fund the economy. This means creating the conditions for a genuine single banking market – one that allows us to leverage the combined financing power of our banking system to overcome the challenges Europe is facing.”
Claudia Buch
Chair of the Supervisory Board
“We all have good reasons to celebrate the tenth anniversary of the SSM. European banking supervision has a clear mandate – to keep European banks safe and sound. It can pursue its mandate independently and in the best interests of all Europeans. It is a core element of the banking union.
Like many European projects, the banking union started with a vision: to supervise banks from a European perspective, to better manage failing banks and safeguard taxpayer money, and to provide the same insurance protection to all European depositors. Ten years on, the vision has become reality. European banking supervision has delivered on its mandate.
Overall, the work of European supervision has paid off. Banks are better capitalised, and non-performing loans have been reduced. Better regulation and supervision have contributed to financial stability and, in turn, growth. European citizens can be confident that their deposits are held in banks that are closely supervised using the same standards.”
Paschal Donohoe
President of the Eurogroup
“The creation of the SSM was a historic moment of institutional transformation for the euro area. It was the right response to strengthen our banking and financial system in the aftermath of the global financial crisis and the European sovereign debt crisis. We are now reaping the benefits of these institutional innovations. Our banks are more stable and more resilient. We are much more capable of dealing with stress events.
But we should also not lose sight of the bigger picture and wider importance of delivering on the original vision of creating a stable architecture for EMU. We all know there is much work to do.
For the SSM in particular, it is great to see it be so forward looking, responding to the changing environment through its priorities around geopolitical shocks, climate and environmental risk-management and the digital transformation.”
John Berrigan
Director-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
“The SSM is a success story. In 10 years, it has evolved from a start-up to the mature organisation it is today. The SSM has become the world’s largest bank supervisor and is recognised as among the most efficient and effective in the world. The SSM is delivering on its mandate: it has made important contributions to financial stability and achieved broad convergence of supervisory practices in the banking union and the Internal Market. The SSM has rapidly adapted to emerging supervisory challenges and ensured a coordinated supervisory response in crises. Building on this, the SSM can continue to evolve, making sure that EU banks remain resilient and continue to serve households and businesses, also in light of new challenges linked to the green and digital transition and a more volatile geopolitical climate.”
Ana Botín
Chair of the Board of Directors, Institute of International Finance and Executive Chair, Banco Santander, S.A.
“We began this task back in 2014 – suitably enough on Saint Charles Borromeo’s day, the patron saint of the banking sector. The challenge we set ourselves was not easy, but thanks to everyone’s hard work and commitment, we have built a single European supervisor with a common methodology, underpinning the solvency and stability of the European financial sector. Despite all that has happened in the years since, this has proven to be resilient.
Looking forward to the next decade and beyond, European banks operate in a continuously changing world, in which we must adapt to new challenges and opportunities. We look forward to working together as we create an even more transparent and predictable supervisory approach – one that continues to bolster financial stability and helps European banks support their customers and power growth.”
José Manuel Campa
Chairperson, European Banking Authority
“Reflecting on 10 years of the SSM, to me, its greatest achievement has been the establishment of a unified supervisory framework across the euro area. This has meant that stability has reigned thanks to consistent standards, leading to a drop in regulatory fragmentation and a build-up of the banking sector’s resilience.
There is still work to be done though, namely the completion of the banking union. In this and in other areas, I look forward to further fruitful collaboration with the SSM to ensure that we safeguard the financing and banking systems for the next 10 years and beyond.”
Dominique Laboureix
Chair, Single Resolution Board
“The main success of the SSM is a tangibly more resilient European financial sector, as clearly shown during the 2023 banking turmoil. This was achieved by building a trusted world-class supervisor with a common culture starting from many different ones – in less than 10 years.
Banks evolve, and so do risks. A key challenge for the SSM, shared with the Single Resolution Mechanism, is ensuring that our increasingly unified supervisory culture remains agile and forward-looking to tackle known and emerging risks.”
Aurore Lalucq
Chair of the Committee on Economic and Monetary Affairs, European Parliament
“Who can deny the positive impact of the SSM since its establishment ten years ago in the wake of the 2008 financial crisis? By strengthening bank supervision, enhancing transparency and implementing stricter capital requirements, we can confidently say that the SSM has been a key architect in stabilising the European banking sector.
However, this stabilisation demands continuous effort. Higher interest rates, digitalisation and environmental and social considerations now top the list of challenges that supervisors must address in their daily work. There’s no doubt that the SSM will play its part, but you can also count on the European Parliament to fully support the SSM's objectives.”
Christian Sewing
President of the Board, European Banking Federation and Chief Executive Officer, Deutsche Bank
“Although many of its founding members have long histories, we should recognise that the SSM itself is still a very young organisation. In its first decade, the SSM has been able to foster a strong basis of trust among its members and apply regulation consistently across its jurisdiction.The stability and robustness demonstrated by European banks amid the global economic and political turbulence of the past five years are a clear testimony to the ECB’s effectiveness as a supervisor. This is a remarkable achievement also given the complexity of Europe. But it is only the beginning. In the next phase of its evolution, we look to the SSM to actively differentiate among the more than 100 banks it supervises, to understand the risks specific to an institution and the context in which it operates. Supervision that is tailored and without any remaining national discretions will allow European banks to better contribute to the growth and competitiveness challenges on which we are all focused.”
Erik Thedéen
Chair of the Basel Committee on Banking Supervision and Governor of Sveriges Riksbank
“A safe and resilient European banking system is important for the prosperity and well-being of us all. Looking back to look ahead, over the past ten years the SSM has been a key player in fostering professional and harmonised supervision across member states and has contributed to safeguarding the public good of smooth and reliable financial services to the real economy. Even though the future is inherently uncertain, I am confident that the SSM is up to the challenge to continue to build on its past success to face whatever the future entails. The journey has just begun.”
Anneli Tuominen
ECB representative to the Supervisory Board and member of the Supervisory Board since 2014
“The one outstanding achievement was the creation of the SSM itself. It has been a great advancement for financial stability in particular and the process of European integration in general. Ten years on, various initiatives have been instrumental to restoring confidence in the banking sector, including progressively lifting the capital bar for banks, reducing legacy non-performing assets and reviewing banks’ internal models. Today, the SSM is a trustworthy and well-respected supervisor.
Looking ahead, the collective challenge for us as supervisors is to make sure that banks are well prepared to deal with a changing risk landscape. I am referring here to issues related to operational resilience and risk management, dealing with hybrid threats, digital and IT-related challenges, and preparing for the green transition. As the more traditional risks do not disappear, we need to ensure that our supervision becomes more efficient and risk-based going forward. Completing the banking union as originally envisaged will further buttress the resilience of our banking system. This is relevant also because the question of the treatment of sovereign bonds still remains unsolved.”