In a keynote speech, European Central Bank Executive Board member Frank Elderson argued that Europe should tackle weak growth, strategic dependence and large investment needs by reducing fragmentation rather than by loosening banking rules. He said Europe’s banking problem is fragmentation, not regulation, and called for a time-bound roadmap to complete the Single Market, deepen the banking union and advance the savings and investments union, while preserving the resilience created by post-crisis regulation and supervision. He said euro area banks are stronger than a decade ago, with better capital, liquidity, governance and profitability, and that this resilience helped sustain lending through recent shocks. The main constraint, in his view, is the lack of a truly integrated European banking market, with around 80% of lending still staying within banks’ home countries, fewer than 2% of deposits held across borders, and cross-border merger activity down sharply from pre-crisis levels. Elderson called for the banking union to be treated as a single jurisdiction, for further harmonisation in areas still subject to national transposition such as governance and licensing, for a clear timetable to finalise the European Deposit Insurance Scheme, and for an EU framework for liquidity in resolution. He also said capital market integration is needed to channel savings into productive investment, including for defence, digital infrastructure and the green transition, which he said requires EUR 1.2 trillion a year until 2030. On supervision, he said the ECB is pursuing simplification without lowering prudential standards. He pointed to recommendations from the ECB’s High-Level Task Force on Simplification, including possible simplification of the capital stack, potentially by merging five macroprudential buffers into two, an integrated reporting framework, and greater proportionality for small and non-complex institutions, including possible changes to the EUR 5 billion threshold. He said streamlining has already shortened approvals for simple cases, with 80% of simple capital-related decisions handled within one week on average in the first quarter of 2026 and simple securitisation approvals cut to less than ten working days, and that in the coming months the ECB will identify supervisory guides to discontinue or update and clarify that the ICAAP management buffer is not a supervisory requirement.
European Central Bank 2026-05-12
European Central Bank's Elderson calls for a time-bound roadmap to complete the Single Market banking union and savings and investments union
The European Central Bank’s Frank Elderson said Europe should address weak growth, strategic dependence and large investment needs by reducing banking market fragmentation rather than loosening post-crisis prudential rules. He called for a time-bound roadmap to complete the Single Market, deepen the banking union, advance a savings and investments union and integrate capital markets, while highlighting ECB efforts to simplify supervision, including potential consolidation of macroprudential buffers, greater proportionality for small institutions and faster approvals without lowering standards.