Earlier on this month, the MFSA hosted BaFin, the Federal Financial Supervisory Authority in Germany, for a Strategy Briefing which called attention to the synergies between the two regulators.
The Briefing saw BaFin President Felix Hufeld emphasise the need for financial sector supervisors to become more digital, faster, more European and global, and more networked if they intended to continue successfully fulfilling their mandate to safeguard the industry’s stability. Hufeld said the MFSA and BaFin had a distinctive advantage, in that both are integrated authorities which oversee the entire spectrum of financial services. He also welcomed the occasion that the Briefing provided to exchange ideas, experiences and plans with MFSA colleagues.
Hufeld pointed to the challenges supervisors and supervised entities are facing, particularly in the shape of fundamental trends, such as negative interest rates and the digital transformation. In this regard, he praised the MFSA’s 2019-2021 Strategic Plan unveiled earlier this year, which aims to bolster its supervisory initiatives, including the fight against financial crime. In comments to the press, the BaFin President said the plan was impressive, and could, if fully put into effect, serve as a benchmark for the German regulator.
Likening the situation within the financial services sector to the Game of Thrones series, Hufeld emphasised the importance for authorities to keep up with the fast-changing pace of the sector. “In Game of Thrones, certainties are cast aside and in a similar fashion, changes in the financial services sector are happening very fast, posing challenges on supervisors to keep up,” Hufeld said. He also mentioned that digitalisation may change the way the sector works, but the supervisory craft remains the same.
In a subsequent Fireside Chat with MFSA CEO Joseph Cuschieri, that included questions taken from the floor, Hufeld was asked for his thoughts on the creation of a capital markets union on the same lines as the EU’s banking union. “The nature of the beast in capital markets is different from the banking union. It would be good to have harmonisation but that is a political problem,” Hufeld said.
With reference to the UK’s exit from the EU and the potential impact this could have on the European financial services sector given London’s large share of the market, Hufeld kept a positive tone. “I hope we find the means to integrate the UK and combine forces when rational thought returns. I remain optimistic, because if we do not, the laughing party will be New York or Shanghai,” he remarked.
