The European Banking Federation has published key messages on the European Banking Authority consultation on the Systemic Risk Buffer, arguing that policymakers should fundamentally reconsider whether a climate related buffer is the right tool and whether this is the right time to revise the framework. It points to the broader push for regulatory simplification and the forthcoming European Commission report on the competitiveness of the financial sectors, which will assess the macroprudential framework, and warns that a novel buffer with untested calibration would send a contradictory signal to markets. The federation argues that capital buffers designed for structural systemic shocks are not well suited to emerging climate risks, which it says are marked by deep uncertainty and long time horizons. It says climate risk exposure in banks' credit portfolios is inherently bank specific and is better addressed under the Pillar 2 framework, while a climate Systemic Risk Buffer could double count capital already held under existing supervisory requirements and penalize sectors and regions most in need of transition and resilience investment. If climate related macroprudential tools are pursued, it says any framework should be aligned across the European Union, risk sensitive, based on clear activation criteria and robust comparable available data, and should meet a proportionality test that weighs costs against prudential benefit.
European Banking Federation 2026-04-30
European Banking Federation urges fundamental rethink of climate related Systemic Risk Buffer in response to EBA consultation
The European Banking Federation has published key messages on the European Banking Authority consultation on the Systemic Risk Buffer, urging policymakers to reconsider a climate-related buffer and the timing of any revision. It argues that capital buffers for structural systemic shocks are ill-suited to uncertain, long-horizon climate risks, which are better addressed under Pillar 2, and warns that a climate buffer risks double counting capital and penalising sectors and regions needing transition investment. If climate-related macroprudential tools are pursued, it calls for an EU‑aligned, risk‑sensitive framework with clear activation criteria, robust data and a proportionality assessment of costs versus prudential benefits.