European Banking Authority executive director Adam Farkas has blamed national regulators for not spotting bank failures in its EU-wide stress tests.
Speaking at the Lansons Communications Future of Financial Services conference, Farkas said the EBA needs more powers to do its job properly.
The EBA, set up in 2011, has come under fire after its annual bank stress tests failed to predict bank crises in Ireland, Spain, Portugal and Cyprus.
Farkas said: “The EBA can initiate and co-ordinate stress tests but we cannot do them. We design the scenario but rely on the numbers we get from the national authorities.
“The asset quality numbers we have received have not been validated in a rigorous manner. To improve the credibility of stress tests you need to give more powers to European institutions.”
Farkas said the tests are improving, resulting in £200bn extra capital in the system and creating a more “resilient” sector.
Open Europe head of economics research Raoul Ruparel says: “The regulators would blame the banks for dodgy data so the question is could the EBA could do any better?”