The European Central Bank has published the Governing Council’s High-Level Task Force on Simplification recommendations, which the Governing Council endorsed and will submit to the European Commission, aiming to simplify the EU regulatory, supervisory and reporting framework while maintaining banking-system resilience and full, timely and faithful implementation of Basel III. The package also reiterates support for completing the banking union and the savings and investment union to reduce fragmentation and foster cross-border integration. Key proposals include simplifying banks’ “capital stacks” by merging existing capital buffers into a non-releasable buffer and a releasable buffer that authorities can lower in stress, while keeping non-binding Pillar 2 guidance separate. The leverage ratio framework would be reduced to a 3% minimum requirement and a single buffer, which could be set to zero for smaller banks. Other recommendations cover enhancing the going-concern loss-absorbing capacity of Additional Tier 1 capital (or removing non-equity elements from the going-concern stack subject to Basel compliance and capital neutrality), expanding and simplifying the EU regime for smaller banks, introducing automatic reciprocation of macroprudential measures, and aligning resolution requirements for all banks more closely with the total loss-absorbing capacity approach applied to global systemically important banks without reducing loss-absorbing resources. The report also calls for greater harmonisation via directly applicable EU regulations, supervisory simplification through a completed Single Rulebook and more flexible model-review practices, a streamlined EU-wide stress test, a European-level mechanism for a holistic view of overall capital (potentially via an expanded Macroprudential Forum), and “report once” integrated reporting supported by broader data-sharing among European authorities, periodic reviews of reporting requirements, and materiality thresholds for resubmissions. The ECB will present these proposals to the European Commission, which is preparing a report on the overall situation of the banking system due in 2026. Separately, the ECB also published “Streamlining supervision, safeguarding resilience”, describing supervisory initiatives under existing legislation that complement the simplification recommendations and can be implemented independently.
European Central Bank 2025-12-11
European Central Bank endorses task force recommendations to simplify EU banking rules by merging capital buffers and streamlining leverage and reporting
The European Central Bank (ECB) has endorsed recommendations from its High-Level Task Force on Simplification to streamline the EU regulatory, supervisory, and reporting framework while maintaining banking resilience and Basel III compliance. Key proposals include merging capital buffers, reducing the leverage ratio framework, and enhancing Additional Tier 1 capital. The ECB will present these proposals to the European Commission, which is preparing a banking system report due in 2026.