In a speech at the farewell symposium for Dutch central bank President Klaas Knot, European Central Bank Executive Board member Isabel Schnabel warned against calls to deregulate banks and argued that post-crisis reforms should be preserved. She framed the priority as maintaining bank resilience while improving the efficiency of existing rules and strengthening safeguards in parts of the financial system where risks are growing, notably non-bank financial intermediaries (NBFIs) and stablecoins. Schnabel pointed to euro area banks’ higher buffers and recent performance under stress, noting that capital ratios are more than double pre-2008 levels and liquidity coverage ratios remain well above minimum requirements. She highlighted a structural shift toward NBFIs, with their share of total credit rising from 12% to 30%, and described concentrated bank–non-bank linkages, including that 14% of the largest banks’ assets and 22% of their liabilities reflect business with NBFIs, with 20% of banks accounting for around 90% of loan and securities exposures and 95% of funding exposures. On stablecoins, she stressed run and spillover risks via banks’ funding structures and reserve-asset fire sales, citing that since the EU’s Markets in Crypto-Assets Regulation entered into force in 2023, large deposits from crypto exchanges and stablecoin issuers at euro area banks rose from under EUR 1 billion in 2024 to over EUR 6 billion by mid-2025. She also argued that higher capitalisation need not undermine competitiveness, citing ECB research that a bank with a Common Equity Tier 1 ratio of 18.5% is about 2 percentage points more profit efficient than one with a ratio of 13.5%, and pointed to ongoing work to streamline supervision (including reform of the Supervisory Review and Evaluation Process) and to harmonise reporting through the Integrated Reporting Framework initiative.
European Central Bank 2025-10-03
European Central Bank’s Schnabel urges governments to resist bank deregulation and build macroprudential rules for non-banks and stablecoins
European Central Bank Executive Board member Isabel Schnabel emphasized preserving post-crisis banking reforms for resilience, enhancing rule efficiency, and strengthening safeguards for non-bank financial intermediaries (NBFIs) and stablecoins. She noted improved euro area banks' capital and liquidity ratios, the growing role of NBFIs, and stablecoin risks, highlighting increased deposits from crypto exchanges and stablecoin issuers. Schnabel argued higher bank capitalization can enhance profit efficiency and mentioned efforts to streamline supervision and harmonize reporting.