On 7 March 2019, the European Central Bank (ECB) published a speech by the Chair of its Supervisory Board, Andrea Enria.

Key points in the speech include:

• a highly integrated EU market remains a long-term goal. Despite the progress achieved, the European banking sector is still fragmented, as the restructuring process has taken place mainly along national lines;
• progress has been made in setting up a much more harmonised regulatory framework but there are important areas in which progress is falling short of what is needed. If there is to be a true European banking sector, banking groups should be allowed to freely allocate their regulatory capital and their liquidity within the euro area. However, there is still reluctance to remove existing barriers as national policy makers still feel that banks are “national in death”;
• some progress has been made with the agreement on the backstop for the Single Resolution Fund but the debate on the European deposit insurance scheme remains stuck;
• non-performing loans (NPLs) remain a supervisory priority for the ECB. The work it has just started on credit underwriting criteria should help to strengthen industry practices and prevent excessive build-ups of NPLs in future; and
• the robustness of internal risk measurement and management remains a central focus of ECB supervisory work. The review of internal models – the TRIM project – will be completed this year, but the follow-up to its findings, coupled with the implementation of the standards and guidelines developed by the European Banking Authority, will keep supervisors and banks busy for quite some time.