Elderson urges banking union progress to unlock €1.2 trillion

Speaking at the Hertie School, Elderson stressed that European banks have reached a return on equity of around 10 percent, while the non-performing loan ratio fell from 6 percent in 2015 to 2 percent.

However, national borders continue to hinder balance sheet scale, with banks granting 80 percent of loans domestically and cross-border deposits below 2 percent.

Elderson dismissed suggestions that regulatory capital constrains lending, pointing to Bundesbank data showing German banks with CET1 ratios above 14 percent increased real economy lending by 3.6 percent during recent crises, compared with 2.6 percent for banks below 12 percent.

“We want simpler requirements, not lower requirements,” Elderson said.

The European Union faces €1.2 trillion in annual investment needs until 2030 across green, digital and defence sectors.

To facilitate private financing, Elderson urged a phased European deposit insurance scheme, starting with the largest cross-border institutions.

Meanwhile, the ECB has streamlined internal processes: processing times for capital decisions dropped from several months to less than six days, while securitisation approvals fell from three months to seven days.

Stress test reporting points were also cut by 55 percent.