European Banking Authority - EBA

economic-dictionary

The European Banking Authority EBA: European Banking Authority) It is the competent supervisory body of the financial system of the European Union in all matters related to the banking sector.

It is the body of the European Union in charge of guaranteeing transparency, stability and efficiency in the actions of European banking entities. It was created in 2011 by EU Regulation 1093/2010 and replaces the Committee of European Banking Supervisors (CEBS).

To correctly understand the operation of the EBA, we must bear in mind the organizational framework of which it is a part, the European System of Financial Supervision, designed in 2010, and which consists of four independent supervisory bodies:

  • European Banking Authority (EBA: European Banking Authority).
  • European Securities and Markets Authority (ESMA: European Securities and Markets Authority).
  • European Systemic Risk Board (ESRB: European Systemic Risk Board).
  • European Insurance and Pensions Authority (EIOPA: European Insurance and Occupational Pensions Authority).

We can see in the scheme that the powers of the EBA would encompass, in general terms, the protection of the rights of bank users (depositors, consumers and investors), the evaluation of the stability of the banking entities and the supervision of the transparency of the bank. Finance system.

Therefore, its scope of action extends to the development of a common regulatory system for the banking sector in a broad sense. From the regulation of payment systems or audit obligations to customer service policy.

Main functions of the EBA

  • Elaborate the "Unique Normative Code" of the European Union: This code aims to define standards for the protection of banking clients and to eliminate contradictions in the banking legislation of the Member States.
  • Evaluate the different risks that can affect banking entities: Analyzing their capital structure, provisions, cash ratios, etc. In fact, the European Banking Authority is in charge of carrying out the famous stress tests or bank stress tests.
  • Strengthen international coordination among the competent supervisory bodies of the Member States.
  • Advising financial institutions in the interpretation of the regulation and disseminating good banking practices: Actually, the EBA's powers of execution are scarce. It is the European Central Bank (ECB) that takes center stage in this regard. The EBA arises rather with the purpose of being a properly consultative body.

Structure of the EBA

Thus, the structure of the EBA is made up of the following figures:

  • Authorities of the Member States (Bank of Spain, in our case).
  • Board of directors.
  • Resolution Committee.
  • President EBA.
  • Executive Director EBA.
  • Board of Supervisors.

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