Montagner urges deeper EU banking integration to boost competitiveness
Patrick Montagner, Member of the Supervisory Board of the ECB, called for deeper integration of European banking and financial systems at a Brussels roundtable on March 4, 2026. He emphasized the need to overcome fragmentation to enhance scale and complete the Single Market.
Europe's fragmented financial landscape
Patrick Montagner highlighted internal fragmentation as a significant obstacle to Europe's economic growth.
European banks operate below optimal scale, facing complex hurdles for cross-border capital allocation, leading directly to higher costs for businesses and households.
This fragmentation stems from diverse national policies, including varying consumer protection laws, tax treatments of financial products, and corporate insolvency frameworks.
Mortgage products, for instance, have distinct national legal requirements and enforcement practices.
These differences complicate non-performing loan management, affecting risk assessment and provisioning.
Banks operating across multiple countries must duplicate compliance functions and fragment capital and liquidity, intensifying uncertainty during stress periods.
Unfinished business: Capital, crisis, and digital
Montagner acknowledged progress from the Single Supervisory Mechanism (SSM) and Single Resolution Mechanism (SRM), but stressed critical areas for further integration.
He urged removing barriers to capital and liquidity flows within banking groups, advocating for regulators to reconsider rules trapping resources at subsidiary levels and encouraging "branchification.
" Developing the crisis management framework, closing resolution gaps, and implementing a European deposit insurance scheme are also essential.
Digital finance, including the potential digital euro, offers new opportunities for cross-border integration, contingent on supportive regulatory environments.
Political will is the missing piece
Montagner's speech clearly outlines the long-standing issues impeding EU financial competitiveness and strategic autonomy.
While technical solutions for deeper integration are known, political inertia remains the primary obstacle to implementation.
Without decisive political commitment, Europe risks falling behind global competitors and failing to unlock its full economic potential.