Claudia Buch: Staying the course in troubled waters - safeguarding the stability of the global banking system

Speech by Prof Claudia Buch, Chair of the Supervisory Board of the European Central Bank, at the Brookings Institution, Washington DC, 25 April 2025.

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

Good morning and thank you for the opportunity to speak with you today.

An environment characterised by heightened geopolitical risks requires resilient banks. More than 70% of global banks' chief risk officers cite cyber resilience as an area in need of significant attention over the next five years, according to a recent survey conducted by the Institute of International Finance (IIF). Many highlight geopolitical risk and operational resilience as key areas of concern. Recent market reactions to the announcement of tariffs show how quickly the environment in which banks operate can change.

To stay the course in these troubled waters, safeguarding the stability of global banking systems has to be our main priority. The global financial system is highly interconnected. International banking is the lifeblood of the global economy. Today, banks' outstanding international claims amount to around 40% of global GDP. This is in stark contrast to a long phase during the 20th century when global markets were practically shut down. In 1963, banks' international claims accounted for less than 2% of GDP.

A flourishing global economy is hardly conceivable without resilient banks. Banking plays a role similar to that of another industry that underpins global trade: shipping. Just as the shipping industry ensures the smooth flow of goods across the globe, banks provide essential services such as cross-border trade finance, global payments processing, correspondent banking, or foreign exchange services.

And global industries need global standards. Take the shipping industry as an example. The International Maritime Organization was founded in 1948, with the aim of ensuring "the safety and security of shipping and the prevention of marine and atmospheric pollution by ships" through global conventions. This international coordination has certainly not come at the expense of international trade, including seaborne trade: Global trade volumes are now 370 times higher than in the early 1950s.