Euro Area: Publication of Financial Sector Assessment Program Documentation-Detailed Assessment of Observance-Basel Core Principles for Effective Banking Supervision

International Monetary Fund

No 2025/215, IMF Staff Country Reports from International Monetary Fund

Abstract: This Technical Note discusses the detailed assessment of observance—Basel Core Principles for effective banking supervision in euro area. The adoption of the banking package in the EU is a major milestone, but some gaps remain with international standards. The European Central Bank (ECB) has been a leader in incorporating climate-related financial risks in its supervisory approach. Resources are stretched, and the ECB has limited control over the allocation of NCA staff dedicated to the supervision of significant institutions. EU legal provisions empower the ECB to approve changes to the ownership or controlling structure of credit institutions. The supervisory work on climate-related financial risks, including the use of enforcement tools, has been resource intensive. The ECB intends to use more actively its escalation policy, including through enforcement actions, which could help in influencing wider deterrence in the banking system. There is scope for further work to supervise Money Laundering and Terrorism Financing risks from a prudential perspective. Even though the national Anti-Money Laundering (AML) authorities are responsible for supervision of correspondent banking accounts from the AML perspective, the ECB should play a greater role in monitoring the policies and processes for the selection, access to, and conduct of these accounts from the perspective of reputation and operational risk.

Keywords: risk data aggregation; SRM regulation; securities financing transactions regulation; SSM framework regulation; banking supervision data division; EU parent undertaking; Anti-money laundering and combating the financing of terrorism (AML/CFT); Credit risk; Credit; External balance assessment (EBA); Operational risk; Global (search for similar items in EconPapers)
Pages: 305
Date: 2025-07-25
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