ECB supervisor says output floor and Single Rulebook must survive simplification push

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

An ECB Supervisory Board member discusses rising global interest rates, sovereign bond exposure and the EU's bank competitiveness debate. Relevant for compliance and government affairs teams tracking how the ECB will position itself on Basel output floor calibration and any move to tailor capital rules by bank size.

• Montagner says sovereign bonds account for around 9% of euro area banks' total assets.
• He states banks are under no obligation to sell sovereign bond holdings even as values fall.
• He says current bank capital is mainly Common Equity Tier 1, unlike 2008 when it was largely subordinated debt.
• He supports preserving the Basel output floor's role even if its calibration is reassessed, as proposed by the European Commission.
• He says the ECB will always favour retaining a Single Rulebook rather than tailoring capital rules by bank size.

Executive summary

In an interview published by the ECB on 7 October 2026, Patrick Montagner, a member of the ECB's Supervisory Board, discussed the impact of rising interest rates on financial stability. He said the ECB's monetary policy and supervisory functions are…

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