European Banking Federation Urges EU To Simplify Regulation

The European Banking Federation (EBF) is urging the European Union (EU) to simplify bank regulations and designate banks as a "strategic sector" to enhance the competitiveness of the region's banks, as reported by Reuters on Tuesday (16 April).

During a briefing, EBF CEO Wim Mijs emphasised the need for Europe to reassess its strategic sectors, such as defense, energy and manufacturing, which have been largely "outsourced" to other countries like the United States, Russia and China.

Although EBF President and Deutsche Bank CEO Christian Sewing had advocated for this recognition last year, it marks the first formal request from banks for "strategic" status. However, the specific advantages of such a designation remain unclear since the EU does not publish a list of strategic sectors.

Banks are also seeking a simplification of regulations, asserting that while post-financial crisis reforms have enhanced industry stability, current regulations are burdensome, overwhelming and increasingly intrusive. The EBF stresses the need for regulatory reviews not only focusing on stability but also on competitiveness and growth.

Critics argue that demands for regulatory relief from the banking industry risk undermining stability, as regulations play a crucial role in maintaining it.

Previously, Francois Villeroy de Galhau, head of France's central bank, highlighted that European banks face stricter scrutiny and have demonstrated greater stability compared to their American counterparts. He emphasised the robustness of European banks, citing substantial capital and liquidity buffers, stringent Basel requirements, and strong supervision within the Banking Union since 2014.

In a separate development, the European Council adopted regulations in February to enable instant payments in euros for consumers and businesses across the EU and European Economic Area nations.