ECB’s Elderson: Banking Supervisors Must Assess Behaviour and Culture
19 September 2023
By Mariana Somensi – NICOSIA (Econostream) - European Central Bank Executive Board member Frank Elderson on Tuesday urged banking supervisors to pay heed to the culture in their organisations as an important factor for bank risk.
Speaking at a conference on the Banking Union, Elderson said, ‘As a prudential supervisor, the ECB is responsible for ensuring that banks are safe and sound and that the financial system is stable. And naturally, if behaviour and culture is a cause for prudential concern, it is essential for us to look at it and to understand it'.
Assessing behaviour and culture may not be as straightforward as the customary prudential supervision, he acknowledged, but, fundamentally, ‘we need to embrace this challenge'.
In a panel discussion that followed his speech, Elderson said, ‘Risks don’t go away because they are more difficult to manage’.
‘We have learned that even if a bank complies with these regulatory metrics … too often, things go wrong’, he added. ‘So there must be something more.’