Elderson: Simplify rules, complete banking union for growth

ECB Executive Board Member Frank Elderson distinguished simplification from deregulation, asserting that simplification maintains resilience while deregulation weakens it.

He highlighted the Single Supervisory Mechanism's (SSM) ongoing reforms, such as fast-tracking simple capital-related decisions, with 80 percent approved within one week in Q1 2026, a process that previously took months.

Similarly, a new fast-track process for simple securitisations cut approval times from three months to less than ten working days in 2026.

Elderson also noted the SSM's collaboration with the European Banking Authority (EBA) on EU-wide stress testing, aiming to reduce required data points by 55 percent through simpler templates.

The objective is a clearer, more coherent, and efficient framework for banks and supervisors, not a change in capital requirements.

Elderson argued that strengthening Europe's competitiveness crucially hinges on greater integration, as the continent still lacks truly integrated banking markets.

He cited that approximately 80 percent of bank lending is domestic, fewer than 2 percent of deposits are cross-border, and cross-border merger activity has sharply declined.

This continued fragmentation prevents banks from achieving scale and efficiency.

He called for a time-bound roadmap to complete the Single Market in banking, including concrete steps towards a European Deposit Insurance Scheme and deeper capital markets.

Elderson also addressed concerns about capital requirements, stating that current levels for large European banks are not more stringent than non-European competitors and have not constrained lending.