• INTERVIEW

Interview with Naftemporiki

Interview with Claudia Buch, Chair of the Supervisory Board of the ECB, conducted by Michalis Psilos

24 March 2026

A lot has changed globally since you visited Greece a year ago. Do you think we are facing a new world order? And if so, what could this entail for European banks?

This is my third visit to Greece as Chair of the ECB’s Supervisory Board, and much has changed since I first visited in early 2024. Some elements of the world order that we once took for granted have been called into question, and geopolitical risks are clearly heightened. This will affect banks, although we may see the negative effects only over time. Strengthening banks’ resilience to geopolitical risks is thus one of our priorities, and we remain strongly committed to international cooperation. Just this month, the Group of Central Bank Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, reaffirmed its expectation of full and consistent implementation of the Basel III framework by all member jurisdictions as soon as possible. These common guardrails are important in uncertain times.

The European economy is under pressure from external threats, such as President Trump’s trade policy and the ongoing wars in the Gulf and Ukraine, as well as internal challenges such as declining competitiveness and the rapid growth of shadow banking. How can we protect Europe’s financial and banking stability in times of such uncertainty?

For me, resilience is the key word here. Resilience is about being able to respond to shocks, to flexibly adjust and to absorb losses if they occur. Banks’ core business is to lend to the economy and therefore take risks – but they must be adequately capitalised to do so and to support their customers, including in difficult times. Strong regulation and supervision are precisely about ensuring this resilience. We also need to put more effort into creating a truly integrated Single Market. There are still many barriers to integration, which prevent European banks from scaling up their activities and reaping the benefits of digitalisation. Better integrated markets can strengthen the competitiveness of banks and their stability through diversification.

You have said in the past that “current challenges require more Europe, not less”. What does this mean? Is the savings and investments union a much-needed step?

Yes. We need greater harmonisation of national rules to strengthen the Single Market – and to simplify supervision and regulation. This is what the savings and investments union is about. Many relevant rules – such as insolvency legislation, corporate governance rules and rules around the mortgage market – differ across countries. And we should not forget that the banking union is not yet complete. European deposit insurance is still missing, which is a significant obstacle to greater integration of banking markets. Depositors need the same level of protection, irrespective of where they are located.

Geopolitical risks are the new frontier of supervision. How can supervisors and banks better prepare for future crises? Are the models that banks were preparing as part of the ECB stress test on geopolitical risk now obsolete?

Banks need good stress-testing models; they need to develop scenarios to understand how geopolitical risks affect their business models and capitalisation. And this is exactly what we are working on. Last year, the EU-wide stress test asked banks how they would respond to a common adverse scenario. The answer was that, overall, the European banking sector is profitable and has capital buffers to absorb higher losses in an adverse geopolitical risk scenario. This year, we are reversing the question – we are asking banks to define the scenario that could lead to a capital depletion of 300 basis points. The answer will provide important insights into the quality of banks’ risk management systems, scenario planning and preparedness.

Could a potential increase in interest rates create a new wave of bad loans?

I don’t want to speculate about future changes in interest rates. I think the issue is much broader. Non-performing loans in euro area banks have come down significantly in recent years – from around 8% of the total loan book in 2014 to around 2% in late 2025. But we cannot take this for granted. Weaker growth, higher energy prices, higher tariffs, less fiscal space to buffer shocks to households and firms – all of this may lead to an upward shift in non-performing loans. Banks therefore need to remain very vigilant and monitor vulnerable sectors and borrowers. And we are conducting work on underwriting standards to ensure that banks use robust criteria when they offer new loans. If these standards weaken, it can be an early warning indicator of future non-performing loans.

I would like to ask you about your discussions in Athens. How do you see the current situation and prospects of Greek banks, as well as the prospects and challenges of the Greek economy?

Greek banks are in a much stronger position today than they were a decade ago. This reflects sustained efforts by banks, supervisors and public authorities. The resilience of banks has significantly improved: profitability has increased, capital positions have strengthened, and assets are of better quality. Non-performing loans have declined from 42% in 2015 to below 3% today. This is a major achievement, supported by the Hellenic Asset Protection Scheme. At the same time, further progress is needed. The scheme has expired; most non-performing loans are now outside the banking sector. Banks remain exposed to sectors that are sensitive to geopolitical risks and to borrowers that might have difficulties coping with higher costs. Continued efforts to strengthen capital quality and contain non-performing loans are essential.

More broadly, growth dynamics in Greece are stronger than the euro area average, which is good news. As also discussed in a recent ECB Blog post, further improving institutional quality, enhancing productivity and sustaining a prudent fiscal stance can help to keep up growth momentum. This is important as the economy also remains vulnerable to external shocks. The war in the Middle East is a case in point: it is already disrupting tourism, shipping and air travel, while pushing up energy prices and insurance costs. There is a high degree of uncertainty about how the situation will evolve and what the impact on banks could be. Since the COVID-19 crisis, fiscal policy has buffered several shocks, but its ability to do so might be more constrained in the future. That’s why it is important to maintain strong, resilient and well-capitalised banks.

You have been working with the Bank of Greece for the last two years. How would you describe your cooperation in two words?

Very good!

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