Laboureix: Crisis reforms delivered, but new risks emerge
Dominique Laboureix, Chair of the Single Resolution Board, reviewed the effectiveness of banking crisis management reforms. Speaking in Stockholm, he highlighted past successes, current gaps in the Banking Union, and emerging challenges from cyber risks and non-bank financial institutions.
Resolution: A proven success
Laboureix began by referencing the 2008 Great Financial Crisis, which necessitated an unprecedented wave of regulation.
He highlighted the Financial Stability Board's Key Attributes for Effective Resolution Regimes as a blueprint for the EU's crisis management framework, notably the Banking Union and the Single Resolution Mechanism (SRM) established in 2015.
The SRM's mandate is to resolve failing banks with minimal taxpayer impact.
Laboureix cited the resolution of Banco Popular Español in 2017 and Sberbank Europe in 2022 as key successes, both incurring zero cost to taxpayers.
He emphasized that these achievements were built on robust resolvability efforts, including over €2.6 trillion in loss-absorbing capacity and €81 billion in the Single Resolution Fund.
These post-2008 reforms, he argued, successfully restored confidence after one of the worst economic fallouts.
Unfinished business in the Banking Union
Despite past successes, Laboureix noted that recent reforms have not yet fully preserved confidence due to remaining gaps in the crisis management architecture.
He specifically mentioned the absence of a common European Deposit and Insurance Scheme (EDIS) and a fully ratified common backstop to the Single Resolution Fund.
While welcoming the Crisis Management and Deposit Insurance (CMDI) reform, he stated it is 'still far from what is needed to complete the Banking Union.'
Laboureix stressed that simplification efforts must enhance, not undermine, the framework's credibility, warning against deregulation that could lower resolvability.
He also supported ongoing FSB work to strengthen global crisis management.
New risks, old tools
The financial world is evolving rapidly, presenting new threats like cyber warfare and the growth of non-bank financial institutions (NBFIs).
Laboureix warned that the current crisis management framework, designed for 2008-era risks, is ill-equipped for these challenges.
He advocated for completing the Banking Union's toolkit and future-proofing it to handle cyber risks and systemic NBFIs globally.
This requires the same boldness as past reforms to act before the next crisis forces intervention.