ECB's Elderson highlights bank resilience, outlines supervisory priorities
Frank Elderson, Vice-Chair of the ECB's Supervisory Board, affirmed that European banks have remained resilient through recent severe shocks. Speaking at a European Parliament hearing on January 28, 2026, he outlined supervisory priorities for 2026-28, focusing on strengthening resilience and simplifying supervision.
Europe's banks absorb shocks
European banks have demonstrated strong resilience through a series of severe shocks since 2021, including the economic fallout from the pandemic, the war in Ukraine, and the largest inflation surge since the 1970s.
They successfully absorbed these shocks, continuing to provide services to people and firms.
Elderson noted that forward-looking, risk-based supervision, along with effective coordination with the ECB's central banking functions, underpinned this resilience.
Early identification of vulnerabilities and decisive action were crucial, allowing monetary policy to successfully reduce inflationary pressures with limited repercussions for the European banking sector.
Banks proactively reduced exposures to Russia and addressed heightened interest rate, market, and liquidity risks before the March 2023 turmoil.
Navigating a fast-changing risk landscape
For 2026-28, the ECB's supervisory priorities target two key areas.
First, strengthening banks' resilience to geopolitical shocks and macro-financial uncertainties, including the intensifying impact of physical climate and nature-related risks.
Supervisors will assess institution-specific geopolitical scenarios.
Second, ensuring operational resilience in an increasingly digitalised financial system, focusing on cybersecurity, third-party risk management, and enhanced risk reporting.
Banks must innovate responsibly by fully incorporating risks from artificial intelligence and crypto-assets into their risk management.
The potential digital euro could also enhance payment services.
Simpler supervision, stronger Europe
Simplifying supervision is essential for competitiveness, provided resilience is not compromised.
However, the true gains depend on deeper financial integration, especially completing the banking union.
Without these broader structural changes, streamlined supervision offers only partial benefits, leaving Europe's financial system less robust against future shocks.