[Check against delivery]
Ladies and gentlemen, good morning,
Let me begin by thanking Karolina, the Swedish National Debt Office and Stockholm University for their kind invitation to speak here today.
This conference celebrates a “decade of progress in crisis management”. But this may be, somewhat, underselling Sweden’s experience.
After all, Sweden successfully handled its first banking crisis in the 17th century!
If I am not mistaken, it was in 1664 when Stockholms Banco, the first bank to issue real banknotes in Europe, collapsed after a devastating bank run. The cause? A classic case of over-issuance: the bank had printed more notes than it could back with copper reserves, prompting a general loss of confidence.
To restore confidence, the Swedish government took decisive action: it established the Sveriges Riksbank and tasked it with the mandate to preserve price stability. From the ruins of Stockholms Banco, the world’s oldest central bank was born.
Now, you might wonder: what does a 17th-century crisis have to do with us today?
The answer is simple: trust.
The financial system, then as now, runs on confidence — confidence that Stockholms Banco’s notes would hold their value; confidence that U.S. mortgage standards were robust in 2008; and, who knows, perhaps tomorrow, confidence that stablecoins will remain pegged at all times.
Once trust runs out, history shows us, consequences can be catastrophic. In the worst cases, the entire system’s credibility needs to be rebuilt from scratch.
Strong reforms become indispensable to restore confidence.
In today’s speech, I exactly want to focus on the role of crisis management reforms in restoring and preserving confidence in the financial system.
I will proceed chronologically, asking one question for yesterday, for today and for tomorrow: Have crisis management reforms been effective in delivering confidence?
I. The reforms of the past
Let’s now turn to the Great Financial Crisis — a crisis that reshaped global finance.
We are in 2008.
After a decade-long boom in the U.S. housing market, the bubble bursts. Losses on mortgage-backed assets ripple through the financial system, triggering a credit crunch and global economic meltdown.
What follows is not just a financial crisis. It is also a crisis of confidence – in banks, in regulators, in the very rules that had allowed excessive risk-taking to grow. An enormous amount of public money was necessary to stop the mess.
As a response to one of the worst crises ever, leaders across the globe come together to launch an unprecedented wave of regulation.
The overhaul of global rules begins in Basel, with the adoption of the Basel III package to strengthen capital and liquidity standards.
But today, I want to focus on another pivotal post-crisis reform adopted even before the final agreement on Basel III – the Financial Stability Board’s (FSB) Key Attributes for Effective Resolution Regimes.
Why? Because these Key Attributes became the blueprint for the crisis management framework in the EU, covered by the BRRD.
Beyond this new piece of legislation, there is also a new organisational set-up: Enter the Banking Union, covered by two regulations, SSMR and SRMR. We are in Stockholm, and I know that Sweden is not (yet) member of the Banking Union!
Concretely, in 2015, the Single Resolution Mechanism, the SRM, was established as the second pillar of the Banking Union, alongside the Single Supervisory Mechanism.
Its mandate? To ensure that failing banks can be resolved effectively in order to protect financial stability with a minimal impact on taxpayers.
Let me remind you that at that time, the idea that one could handle bank crises at a European level in an orderly way without relying on public funds raised more suspicion than enthusiasm.
I cannot blame the sceptics. After all, between 2008 and 2017, the EU approved public aid of ca EUR 1.4 trillion (capital support) and 3.6 trillion (liquidity aid) to financial firms.
However, looking back now, it is fair to say we proved the sceptics wrong.
What a difference the resolution framework and the SRM make! Consider this.
We are in 2017. Just eight years have passed since taxpayers had to foot the bill for some of the largest bailouts in history.
Banco Popular Español, a major Spanish lender fails.
The SRM — through the SRB and relevant NRAs — resolves Banco Popular. Losses are imposed on shareholders and creditors. Cost for taxpayers? Zero.
Fast forward five years.
Sberbank Europe – the European subsidiary of a Russian banking group – suffers the full impact of sanctions imposed by the EU and US on Russia and fails.
Once more, the SRM comes into play – the Croatian and Slovenian subsidiaries are sold and the rest of the group enters normal insolvency proceedings. Again, taxpayers pay nothing.
I could go on and mention crises avoided or cases in other jurisdictions [think about the Credit Suisse case, not exactly a resolution case, but with a resolution mindset, as, ring-fencing or public bail-out were never even on the table! This would have been unthinkable in 2008].
The point is: reforms, when they are sufficiently strong, can deliver.
Let me be clear however – this is no free lunch.
To make resolution a truly credible option in crisis, we had to build resolvability from the ground up. Let me give you a sense of scale of this effort within the Banking Union:
More than EUR 2.6 trillion of loss absorbing capacity built by banks;
EUR 81 billion in the Single Resolution Fund, ready to be deployed;
150 operational and actionable resolution plans drafted and updated every year for significant and less-significant institutions.
If we can resolve banks today, it is because the post-crisis reforms laid the foundations of our crisis management framework. They gave us the tools to tackle the challenges of that era.
This is why I would argue: the post-2008 reforms succeeded in restoring confidence after one of the worst economic fallouts ever.
II. Today’s reforms
Let me now move to today’s reforms.
So, where do we stand? Have recent reforms been effective in preserving confidence in the financial system?
The answer, I’m afraid, is not (yet) totally positive.
Despite a clear diagnosis of the gaps in the crisis management architecture – I could mention the well-known ones, liquidity in resolution or the missing European Deposit and Insurance Scheme (EDIS). We have not yet reached the long-awaited agreements.
In the Banking Union for example, the Eurogroup’s agreement to introduce a common backstop to the Single Resolution Fund via the European Stability Mechanism in 2019 is still in a limbo, pending ratification by one Member State. This reform would ensure an additional EUR 68 billion backstop to the SRF’s EUR 81 billion.
Instead, recent reforms have been geared more towards incremental changes, rather than fully fledged answers.
Take the Crisis Management and Deposit Insurance (CMDI) reform published in the Official Journal a few months ago and applicable everywhere in Europe, including in Sweden.
We very much welcome the CMDI reform at the SRB. The reform enhances our toolkit notably by introducing a DGS bridge for smaller and mid-sized banks in crisis. This is progress. However, this is still far from what is needed to complete the Banking Union.
The lack of a common deposit insurance and a public liquidity backstop still puts the Banking Union at a disadvantage compared to the US or the UK. This was again confirmed in the IMF’s 2025 FSAP report and already flagged in the FSB’s lessons from the 2023 bank failures.
If we wish to achieve full confidence in our crisis framework, we must address these gaps. I take due note of the positive move taken by the Swedish authorities last year about the arrangement on liquidity in resolution. Easier in one country than at EU-wide level, but still a remarkable achievement. We hope CMDI will be a stepping stone to reignite the political momentum for these essential reforms.
Let me also briefly touch on “simplification” or “modernisation” – whatever you prefer.
We are very much in support of these reforms.
I think we can all agree that we want a modern and streamlined framework that makes banks competitive, yet just as resilient. That is the ideal outcome.
But – and this is crucial – simplification should always enhance the effectiveness of reforms. It should not be a vehicle for deregulation or undermine the credibility of the framework. A resolution is only possible if the framework is credible. There is no such thing as a “50 percent successful resolution”.
For this reason, we must be extremely careful when simplifying not to lower resolvability.
This is the stance the SRB takes in various fora, at European and international level
In the recent consultation by the Commission on banks’ competitiveness for example, we argued that a deepening of the Banking Union would unlock significant growth, as also highlighted by the Draghi Report. When confidence is fragmented along national lines, capital and liquidity tend to remain fragmented as well. This limits cross-border banking and hampers banks’ support the European economy.
We also support the ongoing work at FSB-level, and in particular the Implementation Monitoring Review (IMR), led by Randall Quarles, to ensure a full and timely adoption of G20 financial reforms as well as the Crisis Preparedness Task Force, led by Andrea Enria, to strengthen the crisis management framework at the global level.
I have painted a bit of a grim picture of recent reforms. Don’t get me wrong.
Recent reforms were not without merit – they were definitely steps in the right direction. And, let me repeat, resolution already works.
However, the risk landscape is evolving at a pace we cannot afford to ignore and with new threats emerging daily, we need to check if our framework is still fit for purpose.
This brings me to my final point.
III. The reforms of tomorrow
The financial world does not stand still – and neither can we.
Few understand this better than Sweden and the Nordic countries, which have long been at the forefront of adapting to new risks. Since Russia’s invasion of Ukraine, for example, cyber warfare has emerged as a threat to banks and critical infrastructure.
According to ENISA, the European cybersecurity agency, banks account for nearly half of all targeted actors in Europe’s financial sector.
To be clear, these attacks don’t always reach their full objective, fortunately.
But imagine: a successful one could easily paralyse a bank, cause significant outages, threaten the operational continuity of a bank’s critical functions and shatter customers’ confidence in the financial system.
Even a bank with ample capital and liquidity could fail because confidence in its operational resilience evaporates.
Here is the problem – our crisis management framework was not designed for this. It was built to tackle the risks of 2008: the classical hidden losses scenarios.
At the SRB, we are assessing how our toolkit can adapt.
Our starting point is that data availability is the lifeblood of resolution.
If a bank’s systems are compromised or inaccessible, how can we resolve it? We are working with various stakeholders starting with the ECB-SSM to see how we could ensure data remains available even in a cyber crisis, but this is still new territory. Building confidence here will take time.
And new AI LLM models move faster than us! By the way, one should not fall into a sort of generalised pessimism: what we learn from the famous Claude Mythos for example, is that AI can also help find the weaknesses and patch them extremely quickly.
Let me address another structural evolution.
One unintended consequence of tightening bank regulation after the crisis was that risk did not vanish – it simply migrated. While the reforms made banks safer, they also created the incentives for risk to shift elsewhere – into the shadows of the financial system, where oversight is weaker and vulnerabilities grow unchecked.
New markets emerged and new players seized the opportunity to do business. Many of these players, so-called NBFIs, have since significantly grown in size, some even becoming systemic.
This raises crucial questions.
We cannot achieve confidence in the global financial system if there are no crisis management principles for all systemic players. Nor can we indefinitely increase regulation for banks/insurance and CCPs, while allowing certain NBFIs to operate without some appropriate rules.
The principle should be simple: whenever an institution – whatever its form – poses systemic risk, why not thinking about appropriate crisis management rules?
Obviously, the term NBFI is broad and covers so many different realities that the idea of a one size fits all approach does not make sense. And on top, an activity can become systemic while its operators are not systemic themselves on an individual basis.
But, as said, the FSB has already set precedents by adopting the Key Attributes for insurance undertakings and for FMIs, in particular CCPs. On this basis, resolution regimes were established in the EU via the Insurance Recovery and Resolution Directive and the CCP Recovery and Resolution Regulation.
Why stop here? The scope of resolution could be extended to other systemic players/activities. We cannot afford to wait for a crisis to start asking ourselves these questions.
The FSB’s work on data is already a critical step, but for me, we should not wait too long to think about the second one. The strategic review of FSB crisis preparedness activities is an opportunity to adopt a more holistic and system-wide approach – one that reflects today’s markets and risks.
Conclusion
Let me conclude.
The financial world is changing rapidly — perhaps more than ever before.
The post-2008 reforms delivered on their core promise: they stabilised the system and restored confidence after the great financial crisis. We can be proud of these achievements.
However, facing new risks, I suggest two avenues:
To complete our toolkit – in particular by completing the Banking Union with a common backstop and EDIS;
And to make it future-proof – this means equipping ourselves with the tools needed to handle new risks, from cyber risk to NBFIs. And this goes beyond the Banking Union and Europe, it is a world-wide issue.
This will require the same boldness that defined the post-2008 reforms or the ones of the Swedish government in 1664. The question is: will we find the wisdom to act before the next crisis forces our hand?
Thank you for your attention.
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