In particular, European bank representatives confirmed their continued concern over the Basel III proposals on liquidity. They highlighted that further work is still needed and that an appropriate regulatory framework is not yet achieved. They stress that the definition of liquid assets is far too narrow. Due to the many uncertainties on the consequences of the changes, EBF members believe that the observation period outlined in the liquidity proposal should not be used merely to examine if individual banks are resilient to liquidity risk, but also to find out how the new requirements are influencing the financing of the economy. During this observation period, supervisory  authorities must be able to pause and review  the process, amending the proposed metrics if experience based on standardised reporting shows this to be necessary.

EBF Board members believe that the crisis management framework as proposed by the European Commission may contribute to fighting systemic instability. Indeed, the Federation is broadly supportive of the proposal and reiterates its belief that resolution tools should be available to all banks, and that no bank should be considered “too big to fail”. The EBF has however expressed concern about the way some early intervention tools are planned, such as the creation of resolution funds. “We cannot stress enough the importance of global coordination and of maintaining a level playing field in matters of crisis management”, said Clausen. “We agree that bail-in instruments could be an interesting idea, but we believe a much deeper analysis of both national and EU legislation is still necessary.”

Finally, the members of the EBF Board expressed the view that stress testing is a valuable tool for supervisors as part of their ongoing supervision of a bank. They consider that stress testing should use harmonised rules that are already agreed and in force to assess the strength of an individual institution on a dynamic and ongoing basis.