The European Central Bank’s new supervisory agenda, published in December 2025 under the title “Streamlining supervision, safeguarding resilience”, introduces one of the most comprehensive reorganisations of banking oversight since the creation of the Single Supervisory Mechanism. Although framed as an effort to simplify procedures, the document marks a deeper shift in the philosophy of supervision: away from yearly compliance cycles and towards an intelligence-driven, risk-responsive architecture.
The ECB acknowledges that the financial environment in which European banks operate has changed profoundly. Digitalisation, geopolitical instability, climate-related exposures and the increasing interdependence between business models and technology have altered the nature of risk. Traditional supervisory patterns, based on annual full-scope reviews and voluminous reporting, no longer offer the clarity or the responsiveness required to understand how vulnerabilities emerge and propagate. The new framework seeks to correct this imbalance by redesigning supervision not as a sequence of tasks, but as a continuous interpretative process.
At the heart of the document lies the revision of the Supervisory Review and Evaluation Process. For years, SREP has required banks to undergo exhaustive assessments covering all risk dimensions, regardless of their materiality. The ECB now moves towards a multi-year cycle in which only relevant risks are reviewed annually, while other areas follow a longer rhythm. The intention is twofold: to allocate supervisory attention where risk is genuinely emerging, and to free both banks and JSTs from procedural obligations that often overshadow real analytical work. This shift is supported by the Risk Tolerance Framework, a tool that allows supervisors to distinguish between issues that require immediate engagement and those that can be monitored without intrusive follow-up.
Another pillar of the reform is the consolidation of supervisory functions into a single analytical structure. The ECB makes clear that fragmentation has been a longstanding source of inefficiency. Fit-and-proper assessments, on-site inspections, internal model investigations and horizontal reviews often proceeded in parallel, with different timelines and criteria. The new architecture aims to synchronize these activities, ensuring that supervisory signals are interpreted coherently and that the information gathered by one function becomes immediately available to the others. This integration reflects a deeper awareness: when risks evolve quickly, supervisory insight must evolve with the same speed.
Digitalisation plays a decisive role in this redesign. The ECB openly acknowledges that supervision cannot rely on manual processes in a world where banking operations are massively digital. The expansion of the IMAS and SSM portals, the adoption of automated workflows, the use of technology for pattern analysis and the ambition to reduce administrative burden signal a transition towards a model in which supervisors operate through integrated platforms. Data becomes the infrastructure of oversight, while human judgment is concentrated on interpretation, escalation and strategic decisions. The aim is not to replace supervisors with algorithms, but to allow supervisors to focus on what machines cannot do: understanding the context, evaluating governance and assessing the meaning of signals that numbers alone cannot explain.
The agenda also addresses areas where the ECB has long faced criticism: the complexity and slowness of procedures. Capital approvals, internal model authorisations, stress tests and remediation processes will be redesigned to shorten timelines and increase predictability. A fast-track channel for low-risk capital operations is expected to reduce decision-making time to a matter of weeks rather than months. Stress testing will become more forward-looking and less dependent on highly granular submissions. Internal model oversight will be integrated into supervisory planning rather than carried out as isolated projects. On-site inspections will be shorter, more targeted and aligned with the strategic priorities of the JSTs. All of this illustrates a move towards supervision that is both more agile and more focused.
Perhaps the most strategic part of the document, however, is the emphasis on supervisory culture. The ECB recognises that reforms cannot succeed unless supervisors across Europe share a common language, a consistent approach to risk and a coherent understanding of priorities. The initiative to harmonise supervisory behaviour, communication and decision-making represents an attempt to create a single supervisory mindset capable of operating above national differences. In a union where banks remain deeply tied to their domestic environments, cultural coherence within the supervisory system is not a detail: it is the foundation of resilience.
What emerges from the ECB’s agenda is a model of supervision that is lighter in form but heavier in substance. The reduction of duplicative processes does not imply a reduction of discipline. Instead, it aims to make discipline more meaningful by directing supervisory energy to the points where structural risk originates. By shifting from exhaustive checks to analytical prioritisation, the ECB signals that it intends to understand banks not as collections of indicators, but as evolving structures whose vulnerabilities can no longer be captured by static reviews.
From a strategic standpoint, the implications are substantial.
Banks will face a form of oversight that is more predictable, but also more demanding in its expectations. Supervisors will intervene earlier, with clearer methodologies and a deeper focus on governance and forward-looking capacity. Reporting obligations may decrease in quantity but increase in significance, as banks will be required to demonstrate not only compliance, but coherence between their strategy, their risk profile and their internal ability to manage stress.
Paoletty’s Perspective: What This Means for Enterprises and Financial Decision-Makers
From our vantage point as financial analysts and advisors working closely with enterprises and territorial systems, the ECB’s reform carries a message that extends beyond banks. The shift towards risk-based interpretation, methodological stability and forward-looking assessment will influence how credit is granted, monitored and renegotiated. Enterprises—especially SMEs—will increasingly be evaluated through the same logic that guides supervision: the coherence of their structure, the sustainability of their cash flows, the credibility of their governance and the quality of their strategic direction.
In practical terms, the era in which financial positions could be interpreted through historical results alone is closing. Banks will rely more heavily on dynamic indicators, internal ratings, cash-flow projections and signals that anticipate risk rather than confirm it. SMEs will therefore need to strengthen their financial literacy, refine their planning processes and interpret their numbers with greater continuity. The ECB is modernising supervision; enterprises must modernise self-assessment.
What the new supervisory agenda ultimately suggests is that interpretation becomes the central skill of financial stability. Supervisors must interpret banks; banks must interpret their clients; enterprises must interpret themselves. In this chain of understanding, resilience is no longer the product of isolated regulations, but of a culture of clarity—one that connects numbers to structure, and structure to direction.
This cultural shift is where our work finds its meaning.
And it is where the future of financial governance, in Europe and beyond, will be decided.
