ECB’s Visco: Supervision Mechanisms Cannot Eliminate Banking Crisis Risk

20 October 2023

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Ignazio Visco on Friday said that the risk of banking crises was not and could not be completely ruled out.

In a speech in Rome, a text of which was posted to the website of the Banca d’Italia, which he heads until the end of this month, Visco said that ‘no banking supervision mechanism – no matter how efficient – can extinguish the risk of banking crises.’

‘Especially when considering the unending transitions to which the advanced banking sectors are subject in the digital era, as the recent collapse of some US regional banks shows’, he said.

He referred to important achievements of the Single Supervisory Mechanism (SSM), whose adoption was completed ten years ago this month, and urged that perspectives be discussed ‘considering the frontiers of crisis management.’

The asymmetry of prudential banking rules in the European Union was a clear source of imbalance, he said.

‘From this point of view’, he said, ‘it would certainly be desirable to launch a systematic and comprehensive assessment at EU level of the extent to which the current dispersive banking rule directives can be merged into a single comprehensive piece of legislation.’