European banking supervision has a clear mandate – to keep European banks safe and sound. It can pursue its mandate independently and in the best interests of all Europeans.
Today, we all have good reasons to celebrate the tenth anniversary of the Single Supervisory Mechanism (SSM). European banking supervision has a clear mandate – to keep European banks safe and sound. It can pursue its mandate independently and in the best interests of all Europeans. It is a core element of the banking union, which is itself representative of a strong, united policy response to the global financial crisis and the European sovereign debt crisis. These crises exposed the risks of insufficient regulation and supervision. And they were very costly.
Like many European projects, the banking union started with a vision: to supervise banks from a European perspective, to better manage failing banks and safeguard taxpayer money, and to provide the same insurance protection to all European depositors.
But the experience of European supervision also holds broader lessons for Europe. It shows that, while European integration is driven by a vision, this integration often only progresses in response to crises. Successful institution-building in Europe needs an institutional framework and, perhaps even more so, the devotion and energy of the people who work to make a new institution a reality.
It is you, our colleagues in the ECB and the national authorities across Europe, who have shaped European banking supervision and made it an internationally recognised supervisor. This experience underscores the importance of acting today – without waiting for the next crisis – to advance integration and strengthen the banking union.
European integration – a vision for the future and a response to crises
European integration is built on a vision – that cooperation and coordination, creating a single market, dealing with challenges together and in a united way, is superior to disintegration and nationalism. This vision has delivered common rules and institutions. Europe often grows together in challenging times, as Jean Monnet noted in his memoirs: “Europe will be forged in crises, and will be the sum of the solutions adopted for those crises.”
The importance of closely integrated European financial markets was stressed early on, as was the need to address the risks of financial integration. In 1989, the Delors Report highlighted the importance of community powers and a central banking system. In 1995, 17 years before co-legislators decided to create the banking union in 2012, it was argued that an economic and monetary union needs common supervision. Alexandre Lamfalussy, the first President of the European Monetary Institute, said: “The introduction of a single currency and increasing competitiveness between European financial markets imply that the risk of a financial crisis spreading throughout the whole financial system will be even higher… stressing the desirability of a single supervisory institution…”....
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