This is, for example, the case for non-performing loans (NPLs) where our current tools will not prevent the development of new NPLs.Third, some of the proposed deviations from internationally agreed standards, such as the net stable funding ratio, the leverage ratio or the Fundamental review of the trading book, deserve further analysis: Fourth, even though further steps towards more proportionality are welcome for smaller, simpler and less risky banks, we are not in favour of the proposed reduction of the frequency of regulatory reporting by small institutions.
We think that much more progress could have been achieved in harmonising national options and discretions, but there is still a chance to do so during the negotiations.Not all situations can be foreseen in legislation and not all risks can be measured in Pillar 1.Therefore, supervisors need to keep an adequate degree of supervisory judgement to preserve risk-based and institution-specific supervision through Pillar 2, and their ability to act swiftly when needed to ensure the soundness of the EU banking sector.Furthermore there are a number of national supervisory powers which we need access to in all participating Member States to ensure a level playing field.Sixth, it is important that the legislators agree fairly soon on the transitional measures for the capital impact relating to IFRS 9.It is a pleasure to participate in this hearing on the “banking legislation package”.
At the ECB, we consider the proposal to amend the CRD, CRR, BRRD and SRM Regulation timely and necessary.
Second, the proposal does not provide an adequate harmonisation of certain key supervisory tools at the EU level.
These are mainly those powers needed to make certain deductions in capital in order to prudently address risks which are not fully covered by the accounting rules.
Having said that, we also consider there are still seven areas where there is room for substantial improvement in the proposal.
First, it is important to ensure that supervisors have the necessary tools and reporting powers to perform their tasks and address idiosyncratic risks of institutions.
This will allow a more efficient management of capital across the EU.