“Stability through supervision: steering a course through turbulent times” – leading figures in European financial market supervision and Austrian’s political and financial scene will discuss the current state of the financial markets and the severe changes and challenges faced by the financial economy under this overarching topic at the 16th Supervisory Conference of Austrian Financial Market Authority (FMA) taking place today at Messe Wien Congress Center. Podium discussions will address the challenges facing anti-money laundering and the enforcement of financial sanctions, and the role of the European Banking Union as an anchor for stability amidst the prevailing geopolitical situation. Expert panels will address real estate market risks, the EU’s Savings and Investment Union, the structural changes observed in the financial market as a result of investors’ changing preferences, about new products, providers and trends, as well as the EU’s new insurance resolution regime. The FMA’s Executive Directors, Mariana Kühnel and Helmut Ettl, are joined by Claudia Buch, Chair of the Single Supervisory Mechanism (SSM), Bruna Szego Chair of the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA), and Dominique Laboureix, Chair of the Single Resolution Board (SRB) in delivering impulses for discussion. Austria’s Minister of Finance, Markus Marterbauer, and the new Governor of the Oesterreichische Nationalbank, Martin Kocher, will also deliver keynotes.
The FMA’s Executive Board sees a strong financial sector as “part of the solution”
In opening the conference, the FMA’s Executive remarked that the financial sector has proven its resilience in an era of unparalleled geopolitical unrest, and at the end of a long-running economic crisis in Austria, and is now able to contribute towards an economic upturn. “Austria’s financial sector is well-capitalised, stable, and is able to support the upturn and to help Austria emerge from economic recession,” remarked Executive Director Helmut Ettl. “The Austrian financial market is not part of the problem, but can be part of the solution.” This is a success story of the financial reforms since the Global Financial Crisis over 15 years ago.
“Austria’s financial market profits from a strong and independent supervisory authority that works efficiently in a risk-based manner and focuses on the big issues,” remarked new FMA Executive Director Mariana Kühnel. “However, in addition to ensuring stability, it is also important to ensure an economic upturn and to enable growth.” The FMA will play its part in this regard, as Kühnel comments: “The FMA’s supervision keeps pace with the times: we promote financial market innovation and use digital processes and artificial intelligence ourselves to work better and more efficiently.”
It would be inappropriate to backtrack and dismantle financial market regulation again, added Ettl. “There is enormous growing global uncertainty. Now is not the time for deregulation. Post-Global Financial Crisis reforms are now bearing fruits. Such reforms should not be questioned.” However, opportunities do exist to simplify rules and regulations and to overcome barriers: “We are combing through the regulatory framework – at European level too – and are finding possibilities for simplification and reducing bureaucracy”, remarked Ettl, who chairs a European Banking Authority (EBA) Task Force on this issue. There is also a vested interest for the FMA, Kühnel adds: “Clear and simple risk-based supervision is the most effective and efficient form of supervision.”
FMA setting benchmarks in supervision of financial innovations
The Executive Directors’ opening statement expanded upon the area of financial innovations. “The FMA is setting a pan-european benchmark in terms of competence and rigour in the field of crypto-assets”, remarked Kühnel about Austria’s implementation of the Markets in Crypto-Assets Regulation (MiCAR). “Anyone who fails to affording top billing to compliance has come to the wrong address. Providers particularly appreciate this hard line. This is a real FMA success story.” Regrettably, however, the rules are not being implemented with the same level of diligence in all jurisdictions, which has led the FMA to start an initiative for harmonised supervision together with other European market supervision authorities, as Kühnel added. “Within the EU, we are clearly committed to a level playing field and greater rigour in this area.”
Naturally, rigorous supervisoin of financial innovations is only a single piece in the puzzle, Kühnel reflected. Products are often speculative, volatile or risky, with new market segments also more susceptible to fraud, as the FMA’s communications to consumers repeatedly show. “Many new products, especially those popular with young investors, require a greater degree of self-responsibility.” For this reason, the FMA is extending its financial literacy and consumer information media coverage substantially, for example in schools, on social media, and using simple one minute long explainer videos. Young clients are clearly attracted to new products and providers, as Kühnel mentioned: “Our analyses show that four out of five clients under the age of 24 use neo-brokerage and investment platforms”. “This trend has potential to disrupt – established market participants should take it very seriously.”
Conference survey: geopolitical risks are the dominant issue
The traditional survey conducted among the roughly 700 participants at the conference regarding the greatest risks and challenges for the financial markets reinforced the trends mentioned last year. Geopolitical risks remain by far and away the largest concern – 57% of participants selected them as being the largest risk (in 2024 they also came out on top with 49%). Fears have also increased of a new Euro government debt crisis, with 18% feeling this to be the most significant problem (compared with 12% last year). These fears inched ahead of those regarding operational risks (IT and cyber-risk, legal risk, conduct risk) mentioned by 17% (2024: 21%). Real estate risks represent the largest risk for a mere 6% of those surveyed. This estimation mirrors the tendencies towards stabilisation following strong increases in the level of non-performing loans in the commercial real estate sector observed by the FMA.
Commercial real estate risks remain prevalent
“We continue to focus intensively on addressing the fall-out of overheating of prices and lending that developed in the real estate segment during the low interest environment until 2022, and which threatened to become a very serious burden”, Helmut Ettl commented. The FMA took decisive action and continues to monitor developments very closely. “The systemic risk buffer ensures that adequate capital remains in the system. We urge affected individual banks to continue to reduce the level of non-performing loans, and to check whether the risk management of those particularly affected institutions is adequately established,” Ettl elaborated. Inflows of new non-performing loans have meanwhile slowed down, however refinancing maturing loans will remain a particular challenge in the coming years.
Journalists may address further enquiries to:
Boris Gröndahl (FMA Media Spokesperson)
Telephone: +43/(1)249/59-6010
Mobile: +43 676 8824 9995
E-Mail: [email protected]