Moulin calls for capital waivers to integrate European banking
Banque de France Governor Emmanuel Moulin urged European policymakers to introduce cross-border capital and liquidity waivers to complete the Banking Union. Speaking at the Eurofi conference in Dublin, Moulin proposed simplifying prudential rules to enhance bank competitiveness.
The cost of fragmentation
Banque de France Governor Emmanuel Moulin highlighted that third-country institutions now supply 60 percent of corporate and investment banking services to European clients.
While EU banks maintain historically high CET1 ratios and liquidity buffers, cross-border lending accounts for less than 15 percent of total euro area lending.
To overcome this internal fragmentation, Moulin called for cross-border capital and liquidity waivers within cross-border banking groups.
“The time has come to deliver on cross-border capital and liquidity waivers,” Moulin said.
He stated that progress on a common deposit guarantee should not serve as a prerequisite for banking integration.
Pruning the regulatory stack
Moulin proposed streamlining the prudential rulebook by aligning MREL and TLAC rules, removing Pillar 2 overlaps with Pillar 1, and reconsidering the Systemic Risk Buffer alongside additional Pillar 2 leverage constraints.
He also advocated restricting the Maximum Distributable Amount trigger exclusively to the solvency stack.
Furthermore, Moulin supported reviewing output floor redundancies, making preferential treatment for residential real estate permanent, and easing EU-specific constraints on trade finance and securitisation.
Logical economics facing national walls
Moulin rightly identifies capital waivers as essential for European banking scale.
Yet sidestepping common deposit insurance will fail to convince sceptical host supervisors.
Without binding risk-sharing, regulatory streamlining alone cannot create cross-border banking giants.