Key Priorities For a Sustainable Financial Sector
The European Banking Authority (EBA) released its Work Programme for 2025, outlining its roadmap for the year ahead. The document emphasizes the Authority’s commitment to fostering a resilient and sustainable financial sector, taking into account the dynamic landscape shaped by technological advancements and evolving risks. This article will break down the EBA’s five strategic priorities for 2025.
Implementing the EU Banking Package
A significant focus of the EBA’s work in 2025 will be the implementation of the EU banking package, consisting of CRR III and CRD VI. The package encompasses over 140 mandates for the EBA, requiring the development of regulatory standards, guidelines, and reports. This work is crucial to further solidifying the EU Single Rulebook. The EBA’s roadmap outlines the sequencing of these mandates, aligned with deadlines established by co-legislators. The EBA will diligently monitor the package’s implementation, including the European Commission’s decision to postpone the application of FRTB (Fundamental Review of the Trading Book) own funds requirements.
Enhancing Risk-Based Financial Stability
The EBA’s second priority is bolstering financial stability. This involves scrutinizing the effects of interest rate fluctuations on the economy and the banking sector, especially given high inflation and the risk of a credit crunch stemming from tighter credit standards. Furthermore, geopolitical risks and unstable economic conditions necessitate sustained efforts in assessing and monitoring the banking sector’s challenges, including cyber resilience. The EU-wide stress test conducted in 2023, along with a climate scenario analysis for 2024, will inform the EBA’s financial risk monitoring. The EBA will also be developing a regular climate stress test, along with guidelines for institutions’ climate stress tests.
Enhancing Data Infrastructure
The EBA’s third priority focuses on data. The Authority plans to implement its Data Strategy, contributing to the EU’s Supervisory Data Strategy. This involves improving data acquisition, compilation, utilization, and dissemination to stakeholders. The EUCLID (European Centralised Infrastructure for Supervisory Data) platform will be further developed to ensure efficient data flows and access to high-quality data for stakeholders. The EBA is committed to expanding its dissemination platform to include new datasets, incorporating DORA and MiCAR reporting into its framework. In 2025, the EBA will also finalize the transition to an improved data point model and methodology (DPM standard 2.0), ensuring its data dictionary is prepared for future reporting and digital processing challenges.
Starting Oversight and Supervisory Activities for DORA and MiCAR
The fourth priority is the implementation of DORA (Digital Operational Resilience Act) and MiCAR (Markets in Crypto-assets Regulation). DORA came into effect on January 16, 2023, and will apply from January 17, 2025, while MiCAR came into force on June 29, 2023, with phased application dates for different aspects of the regulation. The EBA aims to establish a consistent framework for crypto-asset issuance and digital risk management within the Single Rulebook.
The EBA, in collaboration with other European Supervisory Authorities (ESAs), is preparing for the implementation of both regulations. For DORA, this includes determining the scope of ICT third-party providers (TTPs) subject to oversight, designating critical TTPs, and establishing oversight processes and methodologies. A new IT system is being developed to support these oversight functions.
Under MiCAR, the EBA will assume responsibility for supervising significant crypto-asset providers. This involves developing supervisory policies, procedures, and templates for information exchange, and building IT capabilities. The Crypto-Assets Standing Committee, established in 2024, will facilitate the performance of these supervisory tasks.
Ensuring a Smooth Transition to the New AML/CFT Framework
The final priority for the EBA in 2025 is ensuring a smooth transition to the new Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework. The new EU AML authority, AMLA, was established in 2024 and will become operational in 2025. The EBA will retain its AML/CFT mandate during a transition period until December 31, 2025. The EBA will focus on collaborating with competent authorities and the European Commission to finalize the transition, which involves transferring data, knowledge, and powers to AMLA, offering technical advice, and supporting national competent authorities.
The EBA’s 2025 Work Programme demonstrates a comprehensive approach towards fortifying the European banking sector. By prioritizing the implementation of key regulations like the EU banking package, DORA, and MiCAR, the EBA aims to strengthen the regulatory framework and enhance the stability of the financial system.
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