In this context, supervisors and central banks are viewed as having a role in ensuring the existence of adequate capital and liquidity buffers of supervised institutions. However, there is a clear consensus that competent authorities cannot substitute the private sector for the more fundamental need of the market to recover confidence in the ability of the financial system to manage current risks.
Supervision by the ECB can better ensure a level playing field in terms of supervisory practices. It can enhance the quality and credibility of supervision by adding external eyes to work done by national supervisors – excellent as it may often be. The practice set by the ECB is in any case likely to establish an EU wide benchmark for supervisory standards.