ECB Governing Council promotes single market to enhance bank competitiveness

The European Central Bank (ECB) Governing Council has published proposals to improve the support capacity of banks and the financial infrastructure in the euro area. These proposals, endorsed by all euro area central banks, respond to the European Commission’s public consultation on EU banking sector competitiveness.

The proposals build on the ECB’s December 2025 plans to simplify banking rules, emphasizing the need for harmonization, integration, and scale to foster competitiveness. They highlight that resilience is maintained through simplification, not deregulation, and that unnecessary complexity hampers cross-border banking integration.

The Governing Council calls for the euro area to operate more as a single jurisdiction, with capital and liquidity flowing freely within banking groups. It advocates for progress on creating a European Deposit Insurance Scheme (EDIS) with a clear timetable and urges policymakers to deepen capital markets through the savings and investments union.

Key statements include:

• Euro area central banks support a truly single banking market with free movement of capital and liquidity and equal deposit protection.
• Market integration and cross-border competition can enhance economies of scale, diversify activities, and strengthen resilience.
• Regulatory simplification must address undue complexity without weakening resilience, maintaining measures like the output floor and non-performing loan treatments.
• Capital requirements are aligned with international standards, and recent reforms have not hampered lending capacity.

The ECB proposes concrete regulatory changes, including:

• Shifting from directives to directly applicable regulations.
• Merging five macroprudential buffers into two.
• Increasing proportionality for small banks.
• Streamlining reporting processes.
• Adopting a holistic approach to capital adequacy.

For media inquiries, contact Carlijn Straathof at +49 170 348 7585 or François Peyratout at +49 172 863 2119.

Source: ECB Press Release