COVID-19 pandemic : lessons from the European system of financial supervision

Abstract

The COVID-19 pandemic has posed challenges to financial supervision and regulation at a global level. Supervisors had to quickly adopt convergence measures and align their supervisory priorities and practices. This article aims at analysing and discussing the response of financial supervisors to the COVID-19 pandemic, with a special focus on Europe. It finds that, at the backdrop of the COVID-19 pandemic, there was a high degree of supervisory convergence amongst European supervisors, particularly regarding alignment of supervisory priorities (e.g. digitalisation) and practices (e.g. supervisory flexibility). This shows that supervision is not a static phenomenon but rather something that constantly adapts to a changing environment. That being stated, given that these changes were triggered by the pandemic, they were reactive in nature. Therefore, although financial policy is not static, it can often be reactive.