The Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS) are continuously developing new regulatory guidelines worldwide. To this end, they take into account findings from macro- and microprudential monitoring as well as current socio-political discussions.
The EU adopts global guidelines through a “trilogue” procedure involving the Commission, the Council and the Parliament. In this process, the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD) in particular are taken into consideration. For detailed technical guidelines, the EU turns to the European Banking Authority (EBA) before making a final decision on the texts provided.
The banking union and its role in EU supervision
With the introduction of the banking union, the EU has harmonized its supervisory standards. It comprises the Single Supervisory Mechanism (SSM), the Single Resolution Regime and the Deposit Insurance Scheme. In addition, institutions such as the Single Resolution Board (SRB) were established in order to reallocate powers and responsibilities.
ECB supervision and its priorities
The European Central Bank (ECB) is constantly adapting its inspection guidelines to reflect the shifting supervisory priorities. These priorities are based on risk assessments, macroeconomic trends and supervisory experience, such as the Supervisory Review and Evaluation Process (SREP). The ECB has recently stepped up its inspection activities, including targeted reviews of internal models (TRIM).
The role of national supervisory authorities
In addition to EU and ECB regulation, national supervisory authorities make adjustments to take account of national circumstances. In this context, they often apply ECB principles for significant institutions (SIs) to less significant institutions (LSIs) following the principle of proportionality.
