In a speech delivered at the Brookings Institution last week, Claudia Buch, Chair of the Supervisory Board of the European Central Bank (ECB), discussed how regulators and banks can maintain the resilience of the global banking system in light of emerging risks.
Buch emphasized that resilient banks are essential to safeguarding financial stability, highlighting that over 70% of global banks' chief risk officers are concerned about cyber resilience in the next five years. "A flourishing global economy is hardly conceivable without resilient banks," she argued.
Buch underscored the role of the European banking union, noting that the Single Supervisory Mechanism (SSM) has significantly improved European banking supervision. "With the help of a consistent supervisory framework, we have enhanced the credibility and transparency of European banking supervision," she explained.
Looking ahead, Buch identified key challenges, including geopolitical risks and digitalization. She emphasized that banks must "assess how geopolitical risks could affect their business models" and adapt their risk management frameworks accordingly. "Cyber threats remain a particular area of focus," she warned, referencing the ECB's efforts to improve oversight of third-party providers.
In the face of these challenges, Buch reaffirmed the ECB's commitment to maintaining international standards, stating that "financial stability is a global public good requiring strong global safeguards." She added, “Only through continued collaboration can we promote a resilient global banking system that stands firm against future uncertainties.”
"Global markets require common global standards — not to constrain but to enable activity," Buch concluded. "International financial markets and contagion channels can be quite opaque. If trust suddenly vanishes, not only could financial markets stop functioning, but they can also bring the real economy down with them."
Join The Discussion