Bank of Italy participated in the consultation, pointing out the need for greater flexibility in the process of setting the countercyclical capital buffer, provided that it continues to be based on the use of cyclical risk indicators of a quantitative nature, so as to maintain an adequate level of predictability and harmonisation across EU countries. It would also be preferable not to use this specific capital buffer to address non-cyclical risks.
Moreover, Bank of Italy is in favour of harmonising borrower-based instruments (such as limits on the loan-to-value, loan-to-income, and debt-to-income ratios) at the European level, however minimally, on the basis of the recommendations already issued by the European Systemic Risk Board (ESRB). It is important, however, that the design, activation, and calibration of such tools remain the exclusive purview of the national authorities.
The report highlights how the pandemic has accelerated the trend towards digitisation of retail financial services.
The report discusses benefits from accelerated digitalisation of financial services during the pandemic, and whether those observed changes may be structural or revert back to pre-pandemic levels once conditions normalise. The report also considers the financial stability implications of this accelerated trend towards digitalisation, such as potential market dominance of certain players, and the related concerns around incumbent financial institutions that may be digital laggards.
The report outlines the range of policy actions authorities have taken during the pandemic that may impact market structure and the role of FinTechs, BigTechs and incumbent financial institutions. These actions relate to financial stability, competition, data privacy and governance issues.
Since EBA started those reviews in 2019 and strengthened its AML/CFT guidance, national supervisors have started to adopt meaningful reforms to improve their AML/CFT supervision, but the EBA found that significant challenges remain in important areas such as the identification and assessment of money laundering and terrorist financing (ML/TF) risks.
Among the common challenges that supervisors face, EBA highlights difficulties in
- identifying ML/TF risks in the banking sector and in individual banks;
- translating ML/TF risk assessments into risk-based supervisory strategies;
- using available resources effectively, including by ensuring sufficiently intrusive onsite and offsite supervision; and
- taking proportionate and sufficiently dissuasive enforcement measures to correct AML/CFT compliance weaknesses.
EBA also found that cooperation with Financial Intelligence Units (FIUs) was not always systematic and often ineffective. These challenges have hampered the implementation of an effective risk-based approach to AML/CFT supervision.
The workshop aims at bringing together economists and researchers from supervisory authorities and central banks, as well as leading academics, to discuss the challenges, risks and opportunities of technological innovations in the banking and financial sector as well as banks’ transition to a more sustainable economy.
In preparation for the workshop, the EBA invites the submission of policy-oriented, preferably empirical, research papers on the following topics:
- Developments in technological innovation
- Innovations in financial products, payment systems
- Financing and hedging climate change
- Use of supervisory and prudential regulatory framework in climate finance
- Consistency of the regulatory landscape in the context of technological innovation
The submission deadline is 24 June 2022.
EBA will be conducting the 2022 benchmarking exercise on a sample of 115 banks from 16 countries across the EU and the European Economic Area. The EBA runs this exercise leveraging on established data collection procedures and formats of regular supervisory reporting and assists Competent Authorities in assessing the quality of internal approaches used to calculate risk weighted exposure amounts.
