Reality check on “the complexity of the EU banking regulatory framework”

Background and objectives

As announced in the savings and investments union Communication published on 19 March 2025, the European Commission is preparing a report due in 2026 assessing the overall situation of the banking system in the single market, including an evaluation of the competitiveness of the banking sector. To help it prepare this report, the Commission organised two workshops with the objective of gathering views and exchanging ideas among a wide and varied selection of stakeholders (by invitation only)

• the first workshop, held on 19 September, focused on the economics of the single market in banking
• the present workshop, held on 28 November, focused on the complexity of the EU banking regulatory framework

The aim of these workshops was to have an open debate on the issues and challenges facing the single market in banking (problem definition, causes, implications) and to feed into subsequent analytical internal work in the Commission.

Format

The workshops took place under Chatham House rules and were based on presentations by keynote speakers and remarks made by discussants for each session as well as on debates with all invited participants (representing European institutions and agencies, Member States, academia, think tanks, civil society and the banking sector). Commission officials moderated the exchanges. A summary of the discussions in this workshop can be found below, together with the presentations prepared by the speakers and discussants, as well as a contribution by Prof. Ignazio Angeloni, Senior Policy Fellow at the Leibniz Institute for Financial Research SAFE in Frankfurt and former Director General for Financial Stability at the European Central Bank (ECB).

Summary of discussion

Disclaimer: The summary of this event does not represent the official position of the Commission or its services and does not bind the Commission in any way.

The present high‑level workshop was the second one hosted by the European Commission as part of its ‘single market in banking’ workshop series. It focused on the complexity of the EU bank regulatory framework.

The workshop brought together regulators, academics, industry, civil society and policy experts to examine whether and how undue complexity across the EU’s banking regulatory architecture affects efficiency, consistency and the functioning of the single market. The discussions explored the prudential, macroprudential and resolution frameworks individually and jointly, identifying sources of undue complexity, overlaps and fragmentation, and reflecting on options for simplification without weakening prudential safeguards.

Opening & context

Klaus Wiedner (European Commission) set the scene, emphasising the EU’s commitment to a robust and stable, yet competitive and integrated banking system. He highlighted concerns that cumulative regulatory layers, while well‑intentioned, may in some cases introduce operational burdens, unintended inconsistencies and barriers to cross‑border banking activity.

Session 1: Complexity in the microprudential framework

• Speaker: Christos Gortsos (University of Luxembourg &National and Kapodistrian University of Athens)
• Discussant: Peter Praet (Solvay Brussels School, Université Libre de Bruxelles, former ECB Board member)
• Moderator: Almorò Rubin de Cervin (European Commission)

The session delved into the complexities of the current bank prudential framework. The moderator read a written contribution from Prof. Angeloni, which highlighted the successes of the single supervisory mechanism (SSM) and of the single resolution mechanism (SRM), but underscored deficiencies arising from the insufficient cross‑border footprint of EU banks in the single market. Prof. Christos Gortsos discussed the rule‑based versus principle‑based approach and gave an overview on sources of complexity, noting fragmentation and lack of harmonisation across the EU. Peter Praet emphasised the accomplishments of the SSM in fostering a supervisory culture. While recognising the need for consolidation, he warned against weakening rules that could encourage redistribution of excess capital. He also pointed to the high number of national options and discretions and the difficulty of navigating them. A significant number of participants took the floor. Most of them put forward their views on the best avenues to simplify regulatory requirements, increasing efficiency in capital allocation, and harmonising supervisory processes.

Session 2: Complexity in the macroprudential framework

• Speaker: Thorsten Beck (Florence School of Banking and Finance)
• Discussant: Loriana Pelizzon (SAFE, Goethe University, Ca’ Foscari University of Venice)
• Moderator: Emiliano Tornese (European Commission)

The debate focused on macroprudential buffers, risk‑weight tools and the governance model of the macroprudential toolkit. Prof. Thorsten Beck noted that the framework proved its efficacy during recent financial turmoil. He argued that any review of the macroprudential rules should take a comprehensive approach and maintain that resilience as a guiding principle. Prof. Loriana Pelizzon addressed complexities arising from transposing EU law into national legislation. She noted that in this domain there are certain implementation challenges, including the coordination of the EU and national authorities. Participants noted that the coexistence of multiple buffers with differing objectives can uneven the application of the toolkit across Member States. The governance structure –split between EU and national authorities –adds further layers of complexity in terms of calibration methodologies, approval and communication. The session considered whether simplification and greater coordination could support a more predictable, integrated and transparent single market.

Session 3: Complexity in the resolution framework

• Speaker: Fernando Restoy (Financial Stability Institute)
• Discussant: Diane Fromage (University of Salzburg)
• Moderator: Yann Germaine (European Commission)

Fernando Restoy discussed ideas aimed at making the EU bank resolution framework more efficient, focusing both on institutional and operational elements. Prof. Diane Fromage highlighted the key sources of complexity in the framework, i.e. multiple decision‑making bodies and the complex determination of resolution‑related requirements, and divergent national practices in less significant institutions. Participants discussed the relation between the EU crisis management framework and national rules. The debate also touched upon the role of the Single Resolution Board (SRB) in the banking union, the role of hard and soft law in the broader context of the single market, as well as on the inextricable link between bank resolution and deposit insurance. Participants discussed how to reduce fragmentation, clarify roles and responsibilities, and simplify requirements while maintaining a robust crisis management regime.

Session 4: Interactions across frameworks

• Speaker: Nicolas Véron (Bruegel and Peterson Institute for International Economics)
• Discussant: Daniel Pérez (Banco de España)
• Moderator: Almorò Rubin de Cervin (European Commission)

Nicolas Veron noted the complexity of decision making and the high number of authorities in charge of the prudential, macroprudential and resolution‑related decisions across the EU. He noted that one avenue to simplify may be to reduce the number of decision‑makers. Daniel Pérez emphasised the complexities in aligning level 1 and level 2 provisions, urging for a predictable framework and considering material simplification of the capital stack to enhance transparency. He explored options to reduce the complexity of capital requirements and address the overlapping roles of multiple decision‑makers. This cross‑cutting discussion highlighted how the prudential, macroprudential and resolution frameworks interact to create multiple ‘capital stacks’ and can lead to overlaps or, in some cases, inconsistencies. These interactions can complicate banks’ capital planning and hinder the integration of the single market.

Participants explored opportunities for improved alignment across frameworks, clearer hierarchy of capital requirements and a more coherent EU‑level governance design.

Closing remarks

Ugo Bassi (European Commission) concluded the workshop by stressing the importance of regulatory coherence for competitiveness and financial stability. He underscored the Commission’s commitment to assessing avenues for simplification that preserve prudential objectives while facilitating deeper banking market integration.

Key takeaways

• The EU’s banking regulatory framework is generally fit for purpose, even though it has become unduly complex due to layered legislation, diverse national supervisory practices and the interaction of requirements under the multiple prudential regimes
• Complexity is inevitable as banking is a complex business. However, undue complexity that undermines the efficiency, transparency and integration of the single market should be addressed, without hampering financial stability

More information on reality checks

Introduced by the Commission’s communication on “a simpler and faster Europe”, reality checks are a new consultation tool, at technical level, focused on ensuring that policy objectives are achieved in a way that minimise administrative burden for businesses. In these checks, Commission services seek detailed technical feedback from practitioners on the implementation of EU rules, including on measures to make them simpler and facilitate their implementation.