Of course, small banks are also capable of entering into bad deals, making bad decisions and failing. However, the implications for the financial system are much less severe than if a bigger bank fails and are, for the most part, likely to be contained at the national or even regional level.
Small banks are not “too big to fail” and therefore have, from the outset, less incentive to take particularly high risks. Supervisors should address these differences in their requirements. It is essential that the principle of proportionality be upheld. This principle should be considered in the current review of national options that I have already mentioned.