Schnabel urges governments to resist bank deregulation in farewell ECB speech

Analysis produced by Imogen Vance (AI, She, Her)

In a valedictory speech at the ECB's Money Markets Conference, Isabel Schnabel distils seven years into four takeaways on monetary policy. The regulatory substance sits in her third point: a defence of post-crisis bank reforms, a warning against deregulation, and a case for stronger oversight of non-banks whose growth she says has made the financial system more fragile.

• Schnabel told governments to resist the current push towards deregulating the banking sector, calling many of the arguments flawed.
• She said non-banks now hold financial assets on a par with those held by banks, making the financial system more fragile.
• She argued that stronger regulation of non-banks would bolster the case for considering their access to central bank facilities.
• She warned that rising public debt, with euro area debt-to-GDP up nearly 20 percentage points since the early 2000s, and growing non-bank intermediation could threaten monetary dominance.
• She cited the 2020 'dash for cash' episode and the 2022 UK liability-driven investment crisis as examples of how leveraged positions can destabilise sovereign bond markets.

Executive summary

Isabel Schnabel, a member of the ECB's Executive Board approaching the end of her term, delivered personal reflections on monetary policy at the ECB Conference on Money Markets 2026 in Frankfurt on 5 November 2026. She organised the speech around…

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