There are a number of methods supervisors use to that end – some informal, some formal – including speeches, one-on-one discussions, supervisory guidance, onsite examinations, formal supervisory actions, and regulations. One substantial initiative that seeks to improve risk management practices at banking organizations is Basel II.
And we continue to be faced with heightened uncertainty due to Russia’s devastating war in Ukraine. However, a lot has been achieved in European banking supervision in the past decade. The global financial crisis taught us 15 years ago how important a stable financial system and smooth financial intermediation are for economic wellbeing.