The European Banking Authority (EBA) is a regulatory body that strives to maintain financial stability throughout the EU’s banking industry. The EBA was established to ensure sound banking practices, prevent future banking crises and promote best practices for the EU’s financial sector. The EBA is independent from the EU member states and is governed by an external international organization, the Financial Stability Board (FSB). The primary objective of the EBA is to ensure that banks are safe and sound; however, this can be challenging due to the complex nature of modern banking.The EBA was established as an independent entity to avoid political and economic interference. In addition, an independent authority with a technical focus would be better equipped to identify and address threats to financial stability. In essence, political considerations would limit how far a crisis would take the EU’s finances.For example, Germany’s recent fiscal mismanagement and resulting debt issues were largely due to political interference. Under political management, this would have resulted in greater hardship for the EU as a whole rather than just Germany’s finances. Since its inception, the EBA has striven to create a safe environment for banks by overseeing risk management processes and maintaining compliance with European banking regulations.
