In prepared remarks for the Dewatripont Fest conference, European Central Bank Banking Supervision Chair Claudia Buch restated the economic case for prudential bank supervision and linked it to the ECB’s current supervisory approach. She framed supervisors as acting on behalf of dispersed depositors, with capital and solvency requirements and continuous monitoring supporting early intervention and, in the European framework, escalation from supervisory measures to withdrawal of a banking licence where authorisation conditions are no longer met. The speech highlighted the ECB’s ongoing move to a more risk-based supervisory model. Internal model reviews are being streamlined so supervisory capacity can be redirected to the most relevant risks, while the Single Supervisory Mechanism supervisory culture initiative is intended to embed these reforms across the ECB and national competent authorities. Buch also reiterated continued supervisory attention to the credibility of intervention, risks in complex business models, and banks’ governance and incentive structures, alongside capital, liquidity and risk management, with supervisory measures escalated in a timely manner where deficiencies are identified. Referring to the March 2023 banking turmoil in the United States and Switzerland, she said euro area banks’ resilience, supported in part by Basel III implementation, should not reduce vigilance amid elevated geopolitical risks and reduced fiscal shock-absorption capacity.
European Central Bank - Banking Supervision 2026-05-06
European Central Bank Banking Supervision links prudential supervision to risk-based reforms and internal model streamlining in conference speech
European Central Bank Banking Supervision Chair Claudia Buch used a speech at the Dewatripont Fest conference to restate the rationale for prudential supervision and link it to the ECB’s risk-based approach, including escalation up to licence withdrawal. She highlighted streamlined internal model reviews, the Single Supervisory Mechanism supervisory culture initiative, and continued focus on credible intervention, complex business models, governance, and risk management. Buch cautioned that euro area banks’ resilience during the March 2023 turmoil should not lessen vigilance amid elevated geopolitical risks and reduced fiscal shock-absorption capacity.