In his opening address, Mr Claudio Borio, Head of the Monetary and Economic Department at the BIS, shared his views on prospects for financial stability in Europe and worldwide. He elaborated on the implications of three long-term trends, termed the "risky trinity": declining labour productivity growth, rising global debt and narrowing policy room for manoeuvre. He noted the types of risk faced in a number of countries less affected by the Great Financial Crisis, in the form of a build-up of traditional financial imbalances, and those in some countries most affected by it, in the form of incomplete balance sheet and bank repair. He highlighted the possible risk of a debt trap.
In her keynote address, Ms Danièle Nouy, Chair of the Supervisory Board of the European Central Bank, argued that Europe chose the right regulatory and supervisory response to the financial crisis. The revamped European rulebook for banks as well as the European banking supervisory and resolution frameworks have made banks safer and sounder, and reduced the likelihood of future crises. At the same time, they have helped to level the playing field for banks and set the ground for a truly European banking sector. However, Ms Nouy also pointed out that more needs to be done: a European deposit insurance scheme needs to be set up and the rulebook for banks needs to be harmonised further.
Mr Andrea Enria, Chairperson of the European Banking Authority, highlighted the importance of accurate valuation for both going- and gone-concern supervision. He noted that there have been improvements in addressing the "too little too late" concern of the G20, thanks to more forward-looking valuations and enhanced transparency to foster market discipline. However, he also underlined that accounting valuation is a necessary but not sufficient step to address all supervisory concerns, especially those related to NPLs. Therefore, Mr Enria indicated that supervisors, through their own mandates, can and should actively encourage banks not only to make realistic valuations, but also to take proactive steps to address potential weaknesses.
Press release
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