Claudia Buch: Incentives matter - what is different in banking and what role does supervision play?
Speech by Prof Claudia Buch, Chair of the Supervisory Board of the European Central Bank, at the Frankfurt School of Finance and Management, Frankfurt am Main, 22 October 2025.
The views expressed in this speech are those of the speaker and not the view of the BIS.
I am pleased to be speaking to you today at a university with a strong tradition in financial education and research. Many of you are preparing for careers in banking or other areas of finance. The themes I want to talk about are relevant to your future work in whatever form it will take, either inside or outside the financial sector, in various roles in banks. Your decisions may have many positive effects – but they can also influence the safety of individual institutions or even the resilience of the financial system.
Let me quickly recap where the European banking sector stands now, ten years after the launch of the Banking Union.
Over the past decade, the European banking sector has become more resilient, thanks to better regulation and supervision and to better risk management. Policy support to the real economy during the Covid pandemic and the energy crisis has also indirectly supported banks and helped to preserve resilience. Non-performing loans threatened the survival of many banks at the beginning of the Banking Union more than 10 years ago. Today, these have declined significantly. The capitalisation and liquidity positions of banks have improved.
Preserving resilience and trust in the banking sector is important because the environment in which banks operate remains challenging. Geopolitical risks, including cyber risks, are heightened. Climate and nature related risks are evolving. The digitalisation of financial services is rapidly reshaping the competitive landscape. All this requires banks to adopt long-term strategies and to remain resilient, both operationally and financially.