The European Central Bank (ECB) has set out its supervisory priorities for the next three years to address the pressing challenges and more structural vulnerabilities in the banking sector, as well as tensions in the US and Swiss banking sectors, the geopolitical context and the inflationary pressures.


2024-2026 ECB Supervisory Priorities

Watch video

Executive summary

The European Central Bank (ECB) has published its supervisory priorities for the next three years. Supervised institutions should strengthen their resilience to immediate macro-financial and geopolitical shocks, accelerate the effective remediation of shortcomings in both governance and the management of climate and environmental risks, and continue to make progress in digital transformation and in building robust operational resilience frameworks. For each of these priorities, the ECB has identified a number of vulnerabilities for which it has set specific objectives and work programs.

Main content

This Technical Note summarizes the supervisory priorities for the period 2024 to 2026 as well as the work programs planned to address the identified vulnerabilities:

  • Priority 1: Strengthen resilience to immediate macro-financial and geopolitical shocks.
    • Under this first priority, i) shortcomings in credit risk and counterparty credit risk management frameworks, together with ii) shortcomings in asset and liability management (ALM) frameworkshave been identified as vulnerabilities.
    • Some of the actions proposed by the ECB to mitigate the underlying risks include targeted reviews focusing on the resilience of portfolios that are more sensitive to the current macro-financial situation, analyses of different aspects of credit and counterparty risk, on-site inspections (OSIs) of interest rate risk in the banking book (IRRBB) and targeted reviews of the soundness and reliability of funding plans, contingency planning, and ALM governance and strategies.
  • Priority 2: Accelerate the effective remediation of shortcomings in governance and the management of climate-related and environmental risks.
    • Vulnerabilities identified under the second priority are i) deficiencies in management bodies’ functioning and steering capabilities and deficiencies in risk data aggregation and reporting; and ii) material exposure to physical and transitional risk drivers of climate change.
    • Some of the follow-up activities in the proposed work program include targeted reviews of both the effectiveness of banks’ governance bodies and the implementation of the risk data aggregation and reporting (RDAR) principles, and targeted OSIs. For climate risks, targeted follow-up on shortcomings identified in the context of the 2022 climate risk stress test and thematic review will be carried out to assess full alignment to supervisory expectations by end-2024.
  • Priority 3: Further progress in digital transformation and building robust operational resilience frameworks.
    • The third and last priority identifies weaknesses in i) digital transformation strategies; and ii) operational resilience frameworks, namely information technology (IT) outsourcing and IT security and cyber risks.
    • The proposed work program indicates that targeted reviews will be conducted focusing on the impact of banks’ digital transformation on their business model, complemented by Joint Supervisory Teams’ (JST) follow-up with banks where material deficiencies are identified. OSIs on digital transformation, outsourcing and cybersecurity management will be conducted. In particular, the cyber resilience stress test will be carried out in 2024. Other planned activities in the work program include data collection and horizontal analysis of outsourcing registers to identify interconnections between supervised institutions and third-party providers, as well aspotential risk concentrations in specific providers.

Download the technical note on ECB Supervisory Priorities for 2024-2026.