The European Central Bank (ECB) has published the Governing Council’s response to the European Commission’s public consultation on the competitiveness of the EU banking sector, setting out proposals intended to help banks and the financial infrastructure support the economy while preserving resilience. The response argues that competitiveness should come from harmonisation, integration and scale, and that regulatory simplification should reduce undue complexity rather than weaken prudential safeguards. The paper calls for the euro area to function more like a single jurisdiction for financial regulation, including removing barriers that limit cross-border integration and scale. It urges synchronised progress on the banking union’s key components, including concrete steps towards a European Deposit Insurance Scheme with a clear implementation timetable, and allowing capital and liquidity to move freely within cross-border banking groups. The response also presses for deeper capital markets through progress on the savings and investments union, while maintaining post-crisis backstops such as the output floor and the prudential treatment of non-performing loans; it also states there is no evidence that capital requirements have hampered banks’ efficiency or lending capacity. The response builds on the Governing Council’s simplification proposals published in December 2025 and indicates the two sets of proposals should be read together. The European Commission launched its targeted consultation in February 2026 to inform a forthcoming report on EU banking-sector competitiveness.
European Central Bank 2026-04-14
European Central Bank Governing Council publishes response to EU banking competitiveness consultation urging single jurisdiction and rule simplification
The European Central Bank has published the Governing Council’s response to the European Commission’s consultation on EU banking-sector competitiveness, advocating harmonisation, integration, scale, and regulatory simplification that does not weaken prudential safeguards. It calls for the euro area to operate more like a single jurisdiction, including progress on banking union and a European Deposit Insurance Scheme, freer movement of capital and liquidity within cross-border groups, and deeper capital markets, while maintaining post-crisis backstops and capital requirements.