Claudia Buch: Ten years of the banking union - laying the groundwork for the next decade

Speech by Prof Claudia Buch, Chair of the Supervisory Board of the European Central Bank, at the "Finanzplatztag 2025" event, organised by Börsen-Zeitung, Frankfurt am Main, 3 March 2025.

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

It has been more than 15 years since the global financial crisis, but its lessons are as relevant as ever. Europe reacted to the financial crisis and the European debt crisis by strengthening its institutions and regulations, with the banking union as a key element. Today's challenges are different, but we still need more European integration and a deeper internal market to face these challenges.

Let's look back at what has been achieved in the past ten years. The global financial crisis caused substantial damage to the real economy, with gross domestic product in Europe falling by 4.3% in 2009 alone. Significant state intervention was necessary to stabilise the financial system and prevent even greater losses. Providing direct assistance to banks put a major fiscal strain on the euro area – even more so than the international financial assistance for individual countries during the euro area sovereign crisis.

Banks in Europe today are more stable and better capitalised than they were ten years ago when the banking union was created, and non-performing exposures have fallen significantly. We now have European banking supervision which can apply common standards, assess risks consistently and take measures when banks show vulnerabilities. The Single Resolution Mechanism – the second pillar of the banking union – ensures that stress in the banking sector can be managed with funds provided by industry, without recourse to taxpayers' money.

All of this improves risk management – and the provision of banking services is not possible without taking risk. Banks transform short-term deposits into long-term loans and they diversify risk, which contributes to growth and prosperity. We as supervisors do not want to impede risk-taking. But it is our task to protect depositors and ensure that the financial system runs smoothly. And the larger the risks, the more capital banks need to absorb unexpected shocks so that when crises hit, deposits are secure and funding for the real economy is ensured.