Elderson: Fragmentation hinders EU growth, integration is key
ECB Executive Board Member Frank Elderson called for deeper European integration to counter fragmentation and unlock growth. Speaking in Brussels, he highlighted the need to advance the savings and investments union and deepen the Single Market.
Fragmentation, not regulation, impedes EU banks
ECB Executive Board Member Frank Elderson highlighted fragmentation as the central challenge hindering Europe's potential and competitiveness.
He argued that national priorities prevent European businesses from scaling up and allocating resources efficiently across borders.
Europe's banking market, he noted, remains largely national due to diverse legal frameworks, impeding risk diversification, economies of scale, and efficient capital deployment.
This limits the financing of large, cross-border projects, particularly for the €1.2 trillion annual green transition investment needed until 2030.
Elderson advocated for a time-bound roadmap to complete the Single Market, treating the banking union as a single jurisdiction.
This involves harmonizing rules, shifting from directives to regulations, and progressing on a European Deposit Insurance Scheme (EDIS) and a strong EU framework for liquidity in resolution.
Stronger banks, simpler supervision
Robust regulation has strengthened European banks, making them better capitalised and liquid.
This resilience allowed banks to act as a stability anchor during crises, maintaining finance flows.
Elderson stressed preserving this strength amid mounting risks, firmly rejecting any call to lower supervisory guard.
He also emphasized Europe's diverse banking landscape as a strength, advocating deeper Single Market integration should not lead to a uniform system.
Elderson proposed expanding proportionality, for instance, by increasing the scope of the small and non-complex institutions (SNCI) regime.
Supervisory simplification is integral to competitiveness, with the ECB recommending streamlined prudential, supervisory, and reporting frameworks, aiming for simpler, not weaker, requirements.