In a speech at Eurofi in Warsaw, De Nederlandsche Bank Governor Klaas Knot set out how European financial institutions can remain resilient amid heightened uncertainty, arguing that robust prudential policies and strong bank buffers should remain the primary line of defence. He called for the full implementation of the final Basel III standards in Europe and cautioned against confusing simplification of rules with deregulation that would effectively lower buffers. Knot framed capital and provisions as core tools for absorbing unexpected and expected losses, noting that post-crisis buffer strengthening helped banks continue lending during the pandemic. While expressing sympathy for simplifying complex capital calibration, he stressed the trade-off that simpler rules are less risk-sensitive and therefore need to be calibrated more prudently, pointing to the leverage ratio and standardised approaches. He also backed steps to strengthen Europe’s internal market and further integrate fragmented financial markets through the European Commission’s Savings and Investment Union, including measures to support retail participation such as via pension savings, centralise certain types of supervision, and address structural barriers to consolidation. The speech also endorsed ongoing work on a digital euro alongside cash to maintain access to a universally accepted means of payment as cash use declines and reliance on non-European payment solutions grows, while urging continued support for multilateral institutions such as the International Monetary Fund, the Basel Committee and the Financial Stability Board. Knot noted this was his final Eurofi speech as Dutch central bank governor and as chair of the Financial Stability Board, with his term as president of the Dutch central bank ending on 1 July.
De Nederlandsche Bank 2025-04-11
De Nederlandsche Bank governor urges robust bank buffers and full Basel III implementation while warning against deregulation
In his final Eurofi speech, De Nederlandsche Bank Governor Klaas Knot emphasized the need for robust prudential policies and strong bank buffers to maintain resilience amid uncertainty. He advocated for full implementation of Basel III standards in Europe and warned against deregulation that could lower buffers. Knot also supported measures to integrate European financial markets, develop a digital euro, and strengthen multilateral institutions.