In a contribution to Eurofi Magazine, Sharon Donnery, member of the European Central Bank’s Supervisory Board, argued for simplifying the European Union’s macroprudential capital framework without reducing bank resilience. Building on recommendations from the ECB’s High-Level Task Force that were endorsed by the Governing Council, she backed consolidating the existing architecture into one non-releasable buffer and one releasable buffer, while keeping Pillar 2 guidance separate for bank-specific risks. The non-releasable buffer would combine the capital conservation buffer with the higher of the buffers for global and other systemically important institutions. The releasable buffer would combine the countercyclical and systemic risk buffers and carry a positive rate when systemic risks are neither subdued nor elevated, making capital available during stress. Clear communication would be needed to reduce stigma around buffer use, while common calibration principles and closer coordination would address overlaps with microprudential and resolution requirements, including the leverage ratio and the minimum requirement for own funds and eligible liabilities. Donnery proposed a stronger role for the existing Macroprudential Forum, comprising members of the Governing Council and Supervisory Board, to assess capital requirements across the banking union without changing current responsibilities or creating a new institutional layer. The Single Resolution Board should also participate so that resolution requirements are reflected in the system-wide assessment.

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