Elderson: ECB supervision focuses on resilience and simplification
Frank Elderson, Vice-Chair of the ECB Supervisory Board, highlighted the resilience of European banks through recent shocks. He outlined supervisory priorities for 2026-28, focusing on strengthening resilience and simplifying supervision.
Europe's banks absorb severe shocks
Frank Elderson highlighted the resilience of European banks through a series of severe shocks since 2021, including the economic fallout from the pandemic and the war in Ukraine.
Banks successfully navigated the rapid rise in inflation and the subsequent monetary policy tightening, which culminated in the March 2023 banking turmoil.
Elderson noted that forward-looking risk assessments, recently introduced, helped address these vulnerabilities, limiting repercussions for the European sector.
He stressed that identifying vulnerabilities early and acting decisively are essential to ensure the banking sector remains safe and sound and to safeguard the financial stability that underpins Europe's competitiveness.
New risks, streamlined supervision
The ECB has outlined two key supervisory priorities for 2026-28. These include strengthening banks' resilience to geopolitical shocks, macro-financial uncertainties, and intensifying physical climate risks.
A second priority is ensuring operational resilience in an increasingly digitalised financial system, addressing cybersecurity, third-party risk, artificial intelligence, and crypto-assets.
Elderson also detailed the ongoing simplification agenda.
This aims to make supervision more risk-based and proportionate by sharpening risk approaches and leveraging digital tools to reduce complexity without compromising resilience.
Resilience is no accident
Elderson's speech underscores a critical shift: banking supervision is no longer just about capital, but about adapting to a volatile world.
The emphasis on geopolitical, climate, and cyber risks reflects a necessary broadening of focus.
However, the challenge lies in implementing these complex priorities without creating new compliance burdens for banks.