EBA's Chair Enria talked about the EBA's achievements in the last five years and the challenges that still lie ahead for the Banking Authority.
Mr. Enria first memory refers to 2011, during the first months of the EBA’s existence, when the most difficult financial crisis ever experienced in the European Union reached its zenith. The EBA stress test and recapitalization exercise have been widely criticized, but he believes EBA managed to take three very important policy decisions that shaped the response to the crisis and have been essential in restoring confidence in European banks.
The second set of memories Mr. Enria shares relates to events that enhanced EBA’s awareness of the relevance, and fragility, of the Single Rulebook project and the need for EBA to be ambitious in EBA’s efforts. First, thanks to the data collected by the EBA, it was possible to determine for the first time how important the impact of differing interpretations and application of common EU rules across Member States was for the level playing field. Many examples can demonstrate the importance of EBA’s mandate to bring the Single Rulebook to life. And EBA have delivered on this mandate, producing over 150 standards and guidelines on time and to a high quality, notwithstanding severe resource constraints.
His third and last memory goes to the first confirmation hearing at the Committee on Economic and Monetary Affairs of the European Parliament. There, MEPs rightly sought to ensure that the EBA and its senior management were transparent in their dealings with the industry and accountable to European institutions. EBA aim at an early and open dialogue with all stakeholders, always providing feedback to the comments received and clear roadmaps of future work in order to ensure predictability of EBA’s actions. EBA’s goal has always been to clearly explain what EBA is doing and why EBA is doing it.
Looking forward to EBA’s new challenges
Monitoring the functioning of the Single Rulebook and enhancing proportionality
"Looking forward, I would like, first of all, to reassure the industry participants today that it is not the EBA’s intention to launch any new regulatory grand plan. As a matter of fact, we are as keen as you are, and probably even more, to reduce the intensity of regulatory production and shift our attention to make the reform package work in practice. During 2016 we should be closing the implementation of the G20 reforms. Our focus will be on the calibration of the leverage ratio and on improving the consistency and reliability of risk-weighted assets calculated with banks’ internal models. The EBA has just issued a roadmap and has been receptive of the industry’s request to have longer implementation timelines.” Mr. Enria said.
Completing the adjustment in banks’ balance sheets
The adjustment of EU banks’ balance sheets is well advanced, but not yet completed. On average, European banks have achieved a satisfactory capital position, similar to that of their competitors in the US. Asset quality is also improving, but the heavy legacy of non-performing loans is a drag on profitability and traps capital that should be used to support lending to corporates and households. Supervisors will have to maintain pressure on banks to actively manage non-performing assets and restore lending capacity.
Digital banking and consumer protection
Finally, EBA will have to confront the challenges of financial and technological innovation. Digital banking has the potential to disrupt current business models and raise challenges also for the protection of consumers of financial services. The EBA has already worked on virtual currencies and crowd funding. The mandates contained in the second Payment Services Directive (PSD2) will allow EBA to focus even more in this area.
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