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Financial regulations Updated: 22 May 2018

BBVA debates in Brussels the future of European Supervisory Authorities

The European Commission has initiated a review process of the three European Supervisory Authorities (the European Banking Authority, European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority), known as the ESAs. BBVA took part in a forum in Brussels that debated the present and future of these organizations, together with regulatory authorities and representatives of the financial industry.

José Manuel González-Páramo took part in the European Parliamentary Forum on Financial Services (EPFSF). In this forum, BBVA’s Executive Member of the Board, Head of Global Economics, Regulation and Public Affairs, noted that the review proposal of the European Commission’s ESAs’ pushes for a more integrated Single Market in Europe. With Brexit in mind, he explained, it is essential to clarify the role ESAs —especially the European Banking Authority— should take in the regulatory equivalence processes between the EU and non-EU countries, including the United Kingdom.

The BBVA executive board member shared the round table with Gabriel Bernardino, Chairman of the European Insurance and Occupational Pensions Authority; Andrea Enria, Chairman of the European Banking Authority; and Steven Maijoor, Chairman of the European Securities and Markets Authority, among others.

José Manuel González-Páramo, BBVA Executive Board Member

Towards a greater supervisory convergence

The role of the ESAs has been decisive in promoting a common supervisory culture, to foster supervisory convergence and to clarify and complete EU legislation, stressed BBVA’s executive board member. Looking ahead, José Manuel González-Páramo believes the ESAs’ work should focus on regulatory harmonization to ensure that supervisory practices converge toward the most efficient and effective configuration.

Also, he believes that these authorities should have the necessary resources to develop their functions correctly, while the contribution of the industry should be limited, covering only supervisory activities.

However, José Manuel González-Páramo urged authorities to maintain the current configuration of the ESAs. In his opinion, priority should now be to complete the Banking Union with a European Deposit Guarantee Scheme and a backstop for the Single Resolution Fund.

On the other hand, he noted that, key to effective cooperation in supervisory and regulatory matters are the information exchange mechanisms between authorities, which should be improved without incurring additional costs for institutions.  Notwithstanding, BBVA’s executive board member warned that ESAs should not be turned into the “supervisor’s supervisor,” which will generate a lot of legal uncertainty for supervisors and institutions alike and disrupt the actual well-functioning model.

Finally, he said that the European Systemic Risk Board should keep working with the ESAs to ensure the existence of an adequate macro-prudential framework.