Boris Vujčić, ECB Vice-President, discusses resilience, simplification, and financial integration to enhance the competitiveness of European banks at the ESRB conference.
Boris Vujčić, Vice-President of the European Central Bank (ECB), delivered a keynote speech at the tenth annual conference of the European Systemic Risk Board (ESRB), marking its 15th anniversary.
The ESRB was established 15 years ago as the EU’s macroprudential oversight body, in response to the global financial crisis. Vujčić highlighted the importance of preventing financial crises, which can cause significant costs, including an estimated median fiscal cost of around 7% of GDP for banking crises in advanced economies.
He noted that recent regulatory reforms are increasingly questioned, with concerns that EU rules may hinder bank competitiveness. Despite stricter requirements, the resilience of banks today is an advantage for Europe, supporting sustainable growth.
Vujčić advocated for simplifying EU banking regulations, citing proposals from the ECB’s Governing Council to merge capital buffers, streamline leverage ratio frameworks, and create a proportionate regime for smaller banks. He emphasized that simplicity can enhance efficiency without compromising resilience.
He discussed the relationship between capital and competitiveness, noting that euro area bank capital ratios have increased significantly since 2009, and profitability has improved. Current lending dynamics are more influenced by demand and macroeconomic conditions than by capital constraints, making reductions in capital requirements unlikely to boost lending materially.
Vujčić stressed that the resilience of banks is a strength, enabling them to better withstand stress and support the economy. He identified financial integration as the key to boosting competitiveness, advocating for a genuine Single Market and full banking union to reduce fragmentation, increase scale, and lower borrowing costs.
He highlighted the need for further progress in completing the banking union, capital markets union, and establishing a European deposit insurance scheme. These steps would foster a more integrated and competitive banking sector capable of supporting European economic priorities.
Finally, he pointed out that deep capital markets in the US benefit from a large, stable investor base, including pension funds, which Europe should develop further through harmonized policies on taxation, insolvency, and corporate law to reduce cross-border frictions.
In conclusion, Vujčić reiterated that resilience, simplification, and integration are essential for a strong, competitive European banking system. He emphasized that while progress takes time, the risks of rapid crises underscore the importance of ongoing efforts to strengthen resilience and foster integration for Europe’s financial future.
