Pablo Hernández de Cos: Banking resolution - firm foundations for stability

Speech (via webcast) by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the SRB Conference 2020, Brussels, 8 October 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good afternoon, ladies and gentlemen.

Let me begin by thanking the organisers, and the SRB Chair in particular, for giving me the opportunity to participate in this conference.

Five years have passed since the Single Resolution Board was established as the resolution authority within the Banking Union. That is certainly a short time by institutional standards but, looking back, I would argue that the progress made has been significant. Under the leadership of its chair, Elke König, the SRB has finalised resolution plans - along with their MREL requirements - for all significant institutions. It has likewise fostered their resolvability, and has put in place effective mechanisms for cooperation with the national resolution authorities. All these arrangements have already proved their effectiveness.

From a broader perspective, I would also argue that a more robust European crisis management environment has been conceived. Harmonisation of procedures not only strengthens the Banking Union as it is; I am sure it will also prove essential in future crossborder consolidation initiatives. Bail-in has aligned incentives for managers and creditors alike in reducing excessive risk-taking. And, as a much wished intangible asset to a central banker like myself, the existence of a Single Fund is another milestone, partially mutualising risks in the Euro Area, which is moving forward with a more complete Monetary Union.