ECB's Donnery presents simplification plan for banking supervision
Sharon Donnery, Member of the Supervisory Board of the European Central Bank, presented the institution's agenda for simplifying banking regulation and supervision. The plan, based on High-Level Task Force recommendations, aims to enhance effectiveness and resilience.
Blueprint for simpler banking rules
The European Central Bank's High-Level Task Force (HLTF) on Simplification has outlined key recommendations for the European regulatory, supervisory, and reporting framework.
Endorsed by the Governing Council, these recommendations adhere to principles of maintaining resilience and effectiveness, fostering European harmonisation, and upholding international cooperation.
Key regulatory proposals include reducing capital stack elements, aligning MREL and TLAC frameworks, and establishing a dedicated, simpler regime for smaller banks.
On the supervisory front, the HLTF recommends strengthening the EU Single Rulebook to harmonise practices and increasing the risk focus of supervision by adjusting the prescriptiveness of regulation governing supervisory processes.
Next-level supervision takes shape
Beyond the HLTF recommendations, the ECB is actively pursuing its own agenda for more effective, efficient, and risk-based European banking supervision.
This includes four ongoing initiatives: reforming the Supervisory Review and Evaluation Process (SREP), implementing 'Next-level supervision' for faster decision-making, fostering a consistent supervisory culture, and harnessing digital tools.
The SREP reform is largely set for completion in 2026.
The ECB will also review and reinforce proportionality in LSI/SNCI supervision, ensuring resources focus on critical risks in a rapidly evolving environment.