Non-Bank Financial Intermediation (NBFI)
Really a big thank you for being so numerous, both physically and online.
And it's an honour to have this chance just to talk through some points with you.
They have me seated at the very back of the room at the right, and they said, do you want to speak from that seat, and I said no, I have to come here.
Because as you rightly point out, there is the possibility that some of you may be a little bit tired and sleepy after eating.
And there's no possibility because I've a habit of calling people out, except I can't see all the names.
But I still find you and do that.
Maybe a few things, just to say it is a really important topic that we're talking about.
It's a huge topic.
But also, I don't think there's a sense of urgency, and I think that's really important as well.
So we've time to reflect on this NBFI, I'll just use the acronym rather than the long name.
Because we're launching this review, if you like, a consultation on macroprudential policies for this sector.
And also we have to look at what's happening globally, so that we are consistent.
I think, this title, non-bank financial intermediation, when I speak to my friends about it their eyes glaze over.
And maybe that's how it should be.
Because while it's an important part of the financial ecosystem, it's not something that everybody has a handle on.
And maybe that is the difficulty we face when we're having this conversation about the future.
Because NBFI is a very large umbrella covering many different sorts of financial entities that aren't banks.
So that's a huge chunk.
It includes regulated entities like investment funds and insurance companies.
But though again I note the diversity – investment funds and insurance companies both have their own sets of regulations.
And I think we need to bear that in mind as we look to the future.
It also includes unregulated entities, like family offices.
And also the operators and the infrastructure of capital markets, which again have their own sets of rules.
So as I say, very diverse. But you all know that.
And together, these entities are very important for Capital Markets Union, which is still very much a work in progress, but does have a sense of urgency about it.
Because we know that we've done lots of things to develop the Capital Markets Union.
But we need to go further, and we need political leadership to drive that.
We will do our best in the Commission, as we've done, but we need greater political leadership to complete Capital Markets Union.
That's the political message just to bring home to wherever you're from.
We know because the urgency of this is, is that we don't have a single market for capital.
We have had a single market for 30 years.
The capital markets of Europe are fragmented across 27 national markets.
And we need the different financial entities that make up capital markets today to have the right rules in place so that they can contribute to our overall aim of CMU.
NBFI is also important for financial stability, which should underpin the Capital Markets Union.
Stress events in recent years have shown the sometimes hidden interconnections between NBFI sectors across the financial system.
And this adds a layer of unpredictability and increases liquidity and leverage risks.
Now we have responded to those risks – adding tools to sectoral legislation to mitigate systemic risk from key NBFI sectors.
An example, the recent Solvency II reform has strengthened our management of liquidity risk for insurance companies.
For investment funds, we've done something similar with the recent reform of the AIFMD and the UCITS Directive, by introducing liquidity management tools.
We need to be vigilant about detecting new emerging risks and of course we can never be complacent about financial stability.
So we should take another step when it comes to NBFI.
And make a more complete assessment of how emerging systemic risks are dealt with across this very diverse sector.
So with this consultation, we are taking a complete, an overall view of NBFI across all of its different parts.
We want to assess macroprudential policies and supervision beyond banks in a cross-cutting way.
And I think we need to better understand the risks and vulnerabilities from the different sectors and their impact on the resilience of the financial system.
And of course we want feedback and evidence to check the reliability of our initial assessment, which we published in January.
Our report highlighted specific vulnerabilities stemming from:
- Structural liquidity mismatches
- The build-up of excessive leverage across certain NBFIs
- Interconnectedness that could create unforeseen risk amplifiers or transfer risk from the banking to the non-banking sectors
- And lack of consistency and coordination among macroprudential frameworks across the EU.
We may need to improve our ability to detect risk – especially risk that is hidden in layers of intermediation that are often complex to supervise.
We should improve our oversight and understanding of the interconnectedness in the financial sector.
And that might be between non-banks and banks, or among different non-bank sectors.
Stress testing could help to detect risks and assess the resilience of non-banks to shocks.
To be effective, stress-testing may need to be conducted in a coordinated and system-wide manner.
It should involve all relevant authorities from both bank and non-bank worlds and include all possible systemic risk amplifiers, like liquidity mismatches and excessive leverage.
A system-wide exercise could inform the risk management practices of market operators, as much as it could sharpen the ability of supervisors to detect risks and vulnerabilities.
Looking at the recent experiences of central banks, a system-wide stress test could also help us fill in the data gaps and foster coordination among authorities and market participants.
Of course, when looking at a system-wide stress test, we should also try to minimise the administrative burden on market participants.
I mean, I am really mindful that one of the concerns we have is competitiveness in Europe.
And one of the commitments we've made is to reduce the overall reporting burden.
So I think we have to be mindful of that context.
So to move then to our second goal, which is to assess how effective the existing framework is for key NBFI sectors.
We want to see how tools that serve macroprudential objectives are used, and if there might be regulatory gaps.
Each of these sectors has its own characteristics and operates under its own rules.
So while systemic risks often cut across all NBFI sectors, the differences between sectors need to be reflected in our policy response.
And here we are not looking for a one-size-fits-all solution or to mirror the macroprudential framework for banks. I want to be very clear on that.
We have taken effective action during recent crises to protect Europe's financial system.
And we also know that vulnerabilities remain in some sectors, like short-term funding markets.
In this context, we may consider how to strengthen the legal framework for Money Market Funds.
If I look to our review in January, the Commission also pointed out that effective macroprudential policies require coordination among supervisors across the EU.
So what we're hoping for is feedback, about the role of macroprudential authorities and their ability to support financial stability, especially in times of crisis.
We are consulting on ideas to improve coordination and uniform implementation.
The peer review model – based on collaboration among national authorities and our EU authorities, from ESMA to the ESRB, the ECB and so on – has served the EU's interests.
Building on that, we need to make sure this system of supervision can adopt and reflect macroprudential measures quickly and effectively in the face potentially of a looming crisis.
We should consider strengthening our governance and reporting frameworks to improve data sharing among authorities and market participants alike.
By improving transparency and information sharing, we could strengthen our capacity to detect and address emerging risks in a timely manner.
And I think timeliness is really important.
Because that could improve the resilience of our entire financial system.
So today's event will feed into our reflections.
This morning, I know in the first panel, you discussed the impact of NBFI on EU financial stability.
The second panel looked at the role of macroprudential authorities in monitoring interconnectedness and supervisory coordination.
And I think you all had the chance to listen to market supervisors, macroprudential authorities and the financial sector representatives.
And again, a thank you to all of you for participation today and the valuable contributions that have been made.
The panel that comes next will introduce another dimension, and it recognises the global context to this topic.
Non-banks are important in the EU, and they are important in every other financial system worldwide.
So here we are engaged in international forums, like FSB and IOSCO, to deliver high-quality standards for the financial sector and to ensure that systemic risks are well managed.
So I am delighted that we will be hearing from speakers who can bring in experiences from the US, the UK, Asia, and those international forums.
Because we believe in open dialogue with partners outside the EU.
This is a space where the EU can share what we do, hear from others, and contribute to the international debate.
International coordination on NBFI reforms, for example in the FSB, should remain a priority.
Working together internationally is really important for global financial stability, and to tackle challenges that run across borders.
So good luck with the next panel, with your exchanges.
I look forward to the results of this consultation towards the end of the year.
You may be looking at a different face, but who knows.
And you want it earlier, we can get that information earlier.
But it is more importantly an opportunity for you to have your say.
And I think have your say in a time of calm, rather than a time of crisis when nobody has their say because everybody's screaming at each other.
So use this wisely.
We are listening very carefully.
I mentioned the competitiveness challenge for Europe.
It's very real.
I'm also aware that we need large-scale investments in order to do and fund this transition.
And we have lots of savings around.
So part of this consideration is also those big topics which will drive the Europe of the future.
So I'm very happy that I've had an opportunity to just share with you a few thoughts and that we do value very much what will emerge from this consultation.
And thank you.
| Zařazeno | st 22.05.2024 15:05:00 |
|---|---|
| Zdroj | Evropská komise en |
| Originál | ec.europa.eu/commission/presscorner/api/documents?reference=SPEECH/24/2745&language=en |
| lang | en |
| guid | /SPEECH/24/2745/ |
