Single market progress requires credible exit regime, Machado says
European Central Bank Supervisory Board member Pedro Machado stated that banking integration requires a credible crisis management framework. Speaking in Madrid on October 1, 2026, he stressed that cross-border capital waivers depend on trusted resolution mechanisms.
Trapped billions across national borders
Addressing the European Commission's July 2026 Communication on banking competitiveness, Machado highlighted that national ring-fencing locks up €230 billion of high-quality liquid assets in cross-border subsidiaries.
Cross-border corporate lending accounts for only one-sixth of total euro area lending, while under 2 percent of household deposits cross borders.
Machado emphasized that cross-border capital and liquidity waivers remain unused because host authorities fear bearing resolution costs.
He stated: “An intragroup support commitment is only as good as the failure regime behind it.”
The Single Resolution Board reported bank loss-absorbing capacity at 27.8 percent of risk-weighted assets at the end of 2025.
Four gaps in the safety net
Machado identified four gaps that impede full integration ahead of the 2027 legislative package.
While the Crisis Management and Deposit Insurance framework entered EU law in spring 2026, funding access remains restricted.
Europe still lacks a dedicated resolution liquidity mechanism and ratification of the European Stability Mechanism backstop.
Furthermore, the absence of a common deposit insurance scheme and divergent national insolvency laws continue to fragment gone-concern outcomes.
No shortcuts without shared risk
Machado correctly ties market integration to failure mechanisms instead of treating them as separate tracks.
Host states will not relinquish local liquidity buffers while the fiscal burden of bank collapses remains domestic.
Without a common deposit safety net, cross-border waivers will stay unworkable in practice.