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Enhancing the ECB’s O-SII framework

Author

Listed:
  • Grodzicki, Maciej
  • van der Kraaij, Anton
  • Vogel, Ursula
  • Zsámboki, Balázs

Abstract

Capital buffers for other systemically important institutions (O-SIIs) are set by national authorities. They vary greatly across the EU Member States participating in the banking union. On 1 January 2025 the ECB started using an enhanced floor methodology to assess national O-SII buffer decisions. This methodology adopts a banking union (BU) perspective to address “too-big-to-fail”-related risks at the BU level. The aim is to reduce the heterogeneity in O-SII buffers and achieve a more consistent treatment of the most systemically important institutions. Furthermore, the enhanced methodology recognises the progress made on the European banking union, in line with the approach taken in the G-SIB framework. It introduces a BU floor for O-SII buffers, calibrated based on a linear function mapping O-SII scores from the BU perspective to minimum buffer rates. The enhanced methodology will be fully phased in by 2028. JEL Classification: G21, G28

Suggested Citation

  • Grodzicki, Maciej & van der Kraaij, Anton & Vogel, Ursula & Zsámboki, Balázs, 2025. "Enhancing the ECB’s O-SII framework," Macroprudential Bulletin, European Central Bank, vol. 30.
    • Handle: RePEc:ecb:ecbmbu:2025:0030:1
    Note: 1486549
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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