Supervision under pressure: Europe faces complex risks and tougher choices
Supervision is moving to the centre of Europe’s financial debate. Speaking at the Eurofi Forum in Copenhagen, Martin Moloney, Deputy Secretary General of the Financial Stability Board, warned that “weak supervision is becoming even more of a core risk and wise supervision is a strategic opportunity.” On the same day, the European Supervisory Authorities (EBA, EIOPA and ESMA) urged financial institutions to remain vigilant in the face of mounting geopolitical and market pressures.
Moloney’s speech pulled no punches. He argued that the EU’s fragmented supervisory architecture – spread across 27 member states and multiple sectoral authorities – risks slowing responses to fast-evolving threats such as cyberattacks and crypto markets. He praised the EU’s Digital Operational Resilience Act and Markets in Crypto-Assets Regulation as ambitious frameworks, but cautioned that implementation is uneven and coordination gaps remain. “Innovation often outpaces regulation,” he said, stressing that supervisors must develop the judgement and expertise to keep pace.
The Supervisory Authorities’ Autumn risk report adds urgency. While banks, insurers and pension funds remain resilient, the report highlights deteriorating economic conditions, sharp market volatility, and growing transatlantic trade tensions as key threats. It calls for firms to embed geopolitical risks into daily operations, bolster cyber defences, stress test liquidity, and monitor contagion from crypto assets, echoing Moloney’s concerns about supervisory consistency across borders.
Together, these interventions underline a central tension. Europe has equipped itself with a dense web of regulatory regimes, from prudential standards to new rules for artificial intelligence and digital platforms. But effective supervision is the linchpin. Without sharp coordination and stronger supervisory capacity, even the best rules may fail to prevent instability.
Read Moloney’s speech here and the Supervisory Authorities’ report here.
