26 September 2013

Speech by Bundesbank/Lautenschläger at ESE conference: Supervisors without borders

I have high expectations of the SSM and think it will help us to detect risks in the European banking sector at an earlier stage in future and to tackle them more rigorously. Although I am in favour of a different legal basis, one that could simplify matters a lot given the now very complex SSM governance structure, I am nevertheless convinced of the advantages of the SSM.

One factor will be decisive for the success of the SSM: close and constructive cooperation between all parties involved. The SSM is designed as a system composed of the ECB at the centre and the national competent authorities carrying out decentralised processes and procedures. As members of the supervisory teams and the decision-making bodies, the only way we can meet the high expectations of the SSM is if we all pull together.

Now that the European Parliament has approved the draft legislation, the SSM can soon be officially launched. We have a year full of hard work ahead of us. Thankfully, the preparations are in progress – through the High Level Group of ECB and national authorities’ representatives and the many affiliated working groups, the basic framework of the SSM has already been laid out. Over the coming months, we will define the further details of the cooperation between the ECB and national supervisors and codify them in a Framework Regulation. We will continue our work on the organisational and operational structure of the new supervisory regime and institute an efficient reporting process. However, in my opinion, it is the balance sheet assessment which represents the greatest challenge in the months ahead of us. The ECB needs a clear picture of the actual risk faced by the banks it will be supervising.

In order for the SSM to exploit its advantages, one thing will be paramount: a consistent supervisory approach incorporating the strengths of individual national approaches and experiences. This common supervisory approach must build on established principles such as risk orientation, proportionality as well as an integrated micro- and macro-prudential supervision. It will be particularly important to strike the right balance between ensuring fair competition by treating the same risks equally and, at the same time, allowing for varying market and banking structures as far as these cater for the heterogeneous needs of the real economy.

To all parties involved in the Banking Union – we must be willing to keep learning, to open ourselves to new ideas and experiences, and to bring along the “doubting Thomases”, the hesitant ones, for the ride. The Bundesbank will make every effort to support this process – with words, and with deeds.

Full speech

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