In a contribution at the Bruegel Annual Meetings, European Central Bank Banking Supervision Chair Claudia Buch set out a reform agenda that combines deeper EU banking integration and simpler supervision with unchanged prudential safeguards. She called for harmonised national rules, completion of the banking union through a European deposit insurance scheme and fewer barriers to moving capital and liquidity across borders, while rejecting weaker capital requirements as a route to growth. ECB-supervised banks have an aggregate Common Equity Tier 1 ratio of about 16%, and capital is not currently constraining credit supply. The contribution detailed progress on the ECB’s established supervisory simplification agenda. Around 40 of more than 100 guidance documents will be discontinued, straightforward capital transactions can be assessed in about a week, and the next EU-wide stress test will halve the number of data points banks must report. That reduction complements a roughly 20% cut in reporting used for individual bank assessments. Internal model approvals, on-site investigations and follow-up to findings are also becoming more risk-based, with closer scrutiny reserved for material vulnerabilities. The ECB is applying a more predictable Pillar 2 methodology that seeks to avoid double counting while preserving supervisory judgment over risks not adequately covered by minimum requirements. Buch also supported consolidating macroprudential capital buffers and harmonising national methods, but argued that the leverage ratio, output floor and internationally agreed Basel standards should remain intact.

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