ECB officials discuss simplifying banking regulation, boosting market integration, cyber resilience, and the digital euro project to support Europe’s growth and strategic autonomy.
Frank Elderson, Member of the ECB Executive Board and Vice-Chair of the Supervisory Board, and Alejandra Kindelán, Chair of the Spanish Banking Association, addressed the “Competitiveness for growth” event organized by the Spanish Banking Association.
The debate on simplifying the regulatory and supervisory framework to improve banks’ competitiveness continues, with a High-Level Task Force report published at the end of 2025 and a European Commission consultation underway. The ECB emphasizes the importance of distinguishing simplification from deregulation, maintaining resilience while making frameworks clearer and more efficient.
The ECB’s Single Supervisory Mechanism (SSM) has initiated reforms, including faster decision-making processes, streamlining supervisory guides, and improving stress testing procedures. These reforms aim to reduce compliance costs and enhance supervisory efficiency.
Europe faces approximately €1.2 trillion annually in investment needs for green, digital, and defense goals between 2025 and 2031. Strengthening market integration is crucial, as current fragmentation limits banks’ ability to support growth. A roadmap toward completing the Single Market and advancing banking union is essential for competitiveness.
Regarding capital requirements, the ECB states that current levels are not more stringent than in other jurisdictions and do not constrain lending. The focus remains on maintaining resilience while simplifying the capital framework, including merging macroprudential buffers and clarifying the role of the management buffer in the ECB’s internal capital assessment.
Proportionality is embedded in the EU framework, with smaller banks reporting less data and potential scope for further adjustments, such as increasing the €5 billion threshold for small and non-complex institutions. Cyber resilience is a priority, especially with AI-driven cyber threats, requiring ongoing investment and strategic focus from banks. The ECB plans to send a “dear CEO” letter and collect best practices to strengthen operational resilience.
The digital euro project, expected to launch in 2029, is seen as an opportunity for banks to enhance competitiveness and strategic autonomy. It will coexist with private initiatives, fostering innovation and competition in European payments. The ECB emphasizes the digital euro’s role in reducing dependencies, enabling new business models, and ensuring fair compensation for banks.
Preparations include a pilot exercise in 2027 with over 50 applications from banks and payment providers. The digital euro’s design aims to ensure financial stability, with measures such as holding limits and no remuneration to mitigate deposit outflows and systemic risks. The first issuance is targeted for 2029, contingent on EU legislation adoption in 2026.
