If you are part of the banking union, you need to share. You need to share control over banking supervision and resolution. That is the price to be paid. Now, I understand that it is often seen as vital to have total control over sensitive policy areas. And I understand that there is a feeling that if you want something done well, you must do it yourself.
But is that really true? I don’t think so. If we work together, we are still in control and we can still do things well. The history of the EU is a case in point. When European countries signed the Treaty of Rome 61 years ago, they chose to work together instead of working alone. Today more than ever, this choice is also a reaction to a changing world. Some of the current changes are beyond any single government’s control, and are better managed with the help of strong allies and good friends. [...]
And when I say cooperate, that’s what I mean. I know that some may think we have created a system in which the ECB and the Single Resolution Board hold all the power. I think otherwise. The banking union is very much a joint project. [...]
So, within the banking union, we share control over banking supervision. But the quest for a stable financial system does not stop there. It is crucial for financial stability that each bank is as safe and sound as it can be. But this alone is not enough. The health of each bank is not sufficient to ensure the health of the system. Things are a bit more complicated than that. When it comes to financial stability, the whole is more than the sum of its parts.
If we want to limit risks in the whole system, we must do more than just monitor each part in isolation. We must cooperate. Microprudential policy, which addresses risks in individual banks, interacts with macroprudential policy, which aims to address risks in the whole system.
In both micro- and macroprudential policy, the national and European levels must work in tandem. And in the banking union, they do. While it is the national authorities that take decisions in the first place, it is the ECB that assesses these decisions.
And if it sees a need to take stronger measures, it can do so; it can “top up”, as we say. For this to happen, the ECB’s Governing Council would act on a proposal from the Supervisory Board. So, the Supervisory Board is again strongly involved. In addition, the Supervisory Board and the Governing Council meet regularly to discuss macroprudential issues. Again, everything is done to avoid a situation where a Member State disagrees with a decision taken by the Governing Council.
Now, in order to work together, we must apply common standards and approaches. As I have already said, I see such harmonisation as a major benefit of the banking union. It helps to level the playing field, and it ensures strong and consistent supervision.
But I know that some see this from a different angle. They feel that harmonisation is more of a threat than a benefit. They fear that it will lead to a uniform banking sector, which leaves no room for diversity – either for banks, or in terms of supervision and regulation.
Well, we do aim to achieve a level playing field. But we do not seek to flatten the landscape. We do take into account country-specific circumstances that warrant specific supervisory treatment. [...]
So, as any risk manager will tell you: diversification pays off. For that reason, we value diversity and account for it. We follow the principle of “same risks, same rules, same supervision” – which also means that different risks have to be treated differently – and we take a proportionate approach to supervising banks.
So, the banking union is not at all about centralising power or doing away with diversity. The banking union is a joint project, and it follows the motto of the EU: united in diversity, or forenet i mangfoldighed as you would say in Danish. [...]
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