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The European Banking Authority believes that the EU banking sector is well protected

The President of the European Banking Authority said on Tuesday that he was convinced that the European banking sector was well protected after “more than a decade of operation” after the 2008 crisis, but acknowledged that recent developments called for “vigilance”.

Addressing the Economic Affairs Committee of the European Parliament in Brussels during a debate on the collapse of the Silicon Valley Bank and the implications for financial stability in Europe, José Manuel Campa highlighted the differences between the European and North American banking systems, highlighting all the work done since the 2008 financial crisis.

“Recent events have raised the question, ‘Are we back in 2008?’ European Union (EBA).

Campa stressed that “EU banks have the best position in terms of capital and liquidity, the regulatory framework and a ‘single set of rules’.” [conjunto único de regras prudenciais] added a layer of resilience”, noting that “improved oversight and governance provide better risk management”.

Referring to “an increase in capital and liquidity positions following the great financial crisis,” the official stressed that “EU banks are now largely above minimum liquidity requirements.”

“Comprehensive application in the implementation of the Basel standards to all banks operating in the EU provides even greater sustainability. In particular, the Basel liquidity risk standards have been fully implemented. This is in contrast to the United States, where regulatory standards systematically cover only the 13 largest banks,” he said.

The EBA president also noted that “banks’ sensitivity to interest rate changes has been the focus of EU regulators for more than a year”, recalling that last year the ECB’s banking supervisor reviewed the interest rates and credit spread risk management practices of large institutions.

José Manuel Campa, however, acknowledged that “recent crises show that despite all the improvements in the capital and liquidity position of banks, better regulation and better oversight, failures and distrust can still occur”, so decision makers must ” stay vigilant and do not calm down.

In this sense, and with the goal of “maintaining confidence in a strong regulatory framework” in Europe, the EBA President considers “quick completion of pending regulatory packages” a priority.

Also participating in the debate, European Central Bank (ECB) Supervisory Board Chairman Andrea Henri also said that he “has great faith in the work done” in the EU in response to the 2008 crisis.

The day before, ECB President Christine Lagarde also appeared before the parliamentary committee on economic affairs, reiterating that the institution she leads is ready to intervene “if necessary” to maintain the financial stability of the eurozone. in light of the recent “tensions”, namely the collapse of the North American bank Silicon Valley Bank (SVB) and the sharp fall in the Credit Suisse stock market.

Convinced once again that “the banking sector in the eurozone is resilient, with strong capital and liquidity positions”, the French official stressed that “in any case, the ECB policy toolkit is fully equipped to provide liquidity support to the eurozone financial system. , if necessary, and maintain a smooth transmission of monetary policy.”

“In terms of financial stability, we have all the tools that will be needed, that will ultimately be needed to counter tensions,” he stressed, adding, already at the stage of questions from MEPs, that if by chance these tools prove insufficient, the ECB will be able to “provide the necessary adjustments or recalibrations to deal with any liquidity risk” that could be seen on the horizon.

Author: Portuguese
Source: CM Jornal

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