I anticipate that, over the next few years, the geographical area under our remit will expand and that the number of directly and indirectly supervised banks will continue to grow. On the one hand, further countries will join the euro area. On the other hand, the regime of “close cooperation” gives EU Member  BIS central bankers’ speeches  1  States who do not yet have the euro as their currency a chance to participate in the banking union. When this option was introduced into the SSM Regulation, sceptics thought it unlikely that a Member State would exchange its exclusive supervisory competences for membership of the supervisory mechanism. Developments over the last few months have shown, however, that the ECB has significantly more to offer than just a seat on the Supervisory Board. The ECB enjoys trust and credibility – valuable assets for both monetary policy and banking supervision alike. Credibility, however, has to be earned anew each day. In this respect, the ECB’s monetary policy can already look back on a solid track record. In the area of banking supervision, we stand at the very beginning. But that does not mean that we will only start to find our way on 4 November. For many months now, my colleagues and I have been working to determine, among other things, the focus of our supervisory approach, both conceptually and thematically. The critical issues are: how can the ECB reap the intrinsic benefits of supervising 19 national banking systems?
That is of course just one example, among many, of how we are drawing on the various approaches to establish what is “best practice” as the basis for our supervisory activity. This process will not be completed by 4 November, but will rather be further refined over the coming years. Horizontal analyses and a level playing field Another considerable advantage of European banking supervision will be the possibility to draw comparisons across European countries and to establish a level playing field. The banking sectors of many European countries are dominated by a few large banks. The national supervisory bodies were therefore faced with the problem of having to assess circumstances on the basis of just one bank, or on that of a very small group of banks. I am not just thinking of the assessment of specific portfolios here, but also of the early identification of risks, which only become visible, or are at least easier to identify, in horizontal analysis. Although international working groups and the European Banking Authority (EBA) have addressed this problem, it is only with the establishment of the SSM that a quantum leap forward can be made. The SSM is able to draw on detailed supervisory information from across the euro area and prepare comparative analyses. And I am using the present tense here on purpose. With the ongoing comprehensive assessment, we are already active at the European level.