Buch: EU banking integration needs resilience and simplification
Claudia Buch, Chair of the ECB Supervisory Board, presented the Eurosystem's response to the European Commission's consultation on EU banking sector competitiveness. She outlined a three-pillar reform agenda focused on integration, resilience, and simplification of the prudential framework.
Three pillars for a stronger Banking Union
The Eurosystem's response, presented by Claudia Buch, advocates for a comprehensive reform agenda built on three core pillars.
First, it emphasizes treating the Banking Union as a single jurisdiction, aiming to foster deeper integration.
This involves refocusing banking rules from directives to directly applicable regulations and harmonising legislation on areas like insolvency and mortgages.
The objective is to allow capital and liquidity to flow freely within cross-border banking groups, supported by adequate safeguards.
Completing the Banking Union also requires a European Deposit Insurance Scheme (EDIS) to provide uniform depositor protection and improve risk-sharing, complemented by a robust framework for liquidity in resolution and the ratification of the revised ESM Treaty.
These measures are crucial to overcome market fragmentation and enhance crisis preparedness across the euro area.
Resilience and simplification efforts
The Eurosystem underscores that maintaining resilience is a fundamental prerequisite for sustainable growth.
Post-crisis reforms have significantly strengthened the banking sector, with euro area banks' capitalisation reaching 16.1 percent in 2025 and comfortable liquidity levels.
These enhancements have not produced material unintended side effects.
The third pillar of the agenda focuses on tackling undue complexities in the prudential framework.
Proposals from the ECB's High-Level Task Force on Simplification include reducing capital stack elements, creating a simpler regime for smaller banks, and streamlining supervisory reporting.
Initiatives like "request once, report once, resubmit less" aim to enhance efficiency and effectiveness, ensuring supervision remains risk-focused and proportionate without compromising financial stability.
Ambitious vision, political hurdles
This speech clearly articulates the ECB's vision for a more integrated yet robust EU banking sector.
The emphasis on both simplification and resilience highlights a pragmatic approach to fostering competitiveness without compromising stability, a crucial balance in the current geopolitical and economic climate.
However, achieving full harmonisation and completing EDIS remains a significant political challenge, potentially slowing the practical impact of these well-intentioned reforms.