The European Central Bank published the Eurosystem’s response to the European Commission’s targeted consultation on the competitiveness of the EU banking sector, arguing that competitiveness should be strengthened primarily by reducing financial and regulatory fragmentation while preserving banks’ resilience. It calls for synchronised progress on the banking union and the savings and investment union, and for targeted simplification and harmonisation of the regulatory, supervisory and reporting framework without deregulation. Key proposals include concrete steps towards a fully fledged European Deposit Insurance Scheme with a clear implementation timetable, and removing barriers to cross-border banking by allowing capital and liquidity to flow more freely within banking union groups under safeguards. The response also supports shifting EU prudential law from directives to regulations, including potentially merging the Capital Requirements Directive into the Capital Requirements Regulation, alongside further harmonisation in areas such as insolvency, mortgages and corporate law. On prudential design, it backs Basel III and key backstops such as the 72.5% output floor and the non-performing exposures backstop, warning against extending EU deviations from Basel standards, and proposes simplifying macroprudential buffers by merging five buffers into two combined buffers guided by common methodologies, with the ECB Governing Council taking a more holistic view of overall capital demand via the Macroprudential Forum. Further measures include closer alignment of Minimum Requirement for Own Funds and Eligible Liabilities and Total Loss-Absorbing Capacity without reducing gone-concern resources, expanding proportionality for small and non-complex institutions including by raising the current EUR 5 billion threshold, and streamlining reporting through deeper data sharing, an integrated European reporting system and changes to the public disclosure process. The submission incorporates the ECB High-Level Task Force on Simplification recommendations endorsed by the ECB Governing Council in December 2025 and points to ongoing ECB Banking Supervision reforms, including the Supervisory Review and Evaluation Process reform and the next-level supervision project. Operationalisation and impact analysis of simplification proposals is framed as work to be developed in close cooperation with relevant EU authorities, including with consideration for Member States outside the Single Supervisory Mechanism.
European Central Bank 2026-04-14
European Central Bank urges completion of the banking union with a European Deposit Insurance Scheme timetable and simpler harmonised prudential rules
The European Central Bank published the Eurosystem’s response to the European Commission’s consultation on EU banking sector competitiveness, arguing that competitiveness should be enhanced by reducing financial and regulatory fragmentation while preserving resilience. It calls for synchronised progress on the banking union and savings and investment union, targeted simplification and harmonisation of prudential, supervisory and reporting rules without deregulation, including steps towards a European Deposit Insurance Scheme, freer intra-group capital and liquidity flows under safeguards, and simplifying macroprudential buffers. The response supports full Basel III implementation, expanded proportionality for small and non-complex institutions, and streamlined reporting.