EU finance chief urges overhaul of post-2008 banking framework

Europe must revamp its post-2008 financial crisis regulatory architecture and focus more on boosting banks’ competitiveness rather than simply ensuring their resilience, the EU’s finance chief has said.

Maria Luís Albuquerque said on Thursday that the EU’s current regulatory framework – devised during the turmoil of the eurozone crisis sparked by the meltdown of the US housing market – should be reconfigured to help European financial companies “compete globally”.

“We can no longer assume that yesterday’s solutions fit today’s problems, and we have to test whether the current framework is fit for purpose,” the European Commissioner for financial services said in a speech at the Florence School of Banking and Finance.

Policymakers should “find the courage to ask ourselves whether the approach we put in place in the aftermath of the financial crisis is fully future-proof, or whether the recalibration of certain requirements may be warranted considering global developments”, Albuquerque added.

Her comments come as US President Donald Trump has sought to deregulate swathes of America’s financial system, including by weakening supervision, slashing capital requirements, and limiting stress tests aimed at determining the banks’ resilience to shocks.

They also come amid repeated complaints by EU banks that the bloc’s financial regulations are hampering their ability to compete with US firms – despite Brussels’ push over the past year to slash red tape for financial and non-financial companies.

“From prudential, tax, and reporting requirements to sustainability and digital rules, European banks face an increasingly complex web of overlapping and inconsistent obligations,” the European Banking Federation, a Brussels-based lobby group, wrote in a report last year.

While emphasising that financial stability is “crucial” to protect EU citizens from potential banking crises, Albuquerque also stressed that some previous legislative efforts to strengthen the banking sector’s resilience – such as the long-deadlocked European Deposit Insurance Scheme – should be jettisoned.

She also called on bank representatives to provide input for an upcoming Commission report on the financial sector’s competitiveness, which will be published later this year.

The report will examine financial supervision, crisis management, and remaining barriers to completing the bloc’s Banking Union, Albuquerque said.

“We are taking a thorough look at our system to identify where change is needed, and we are prepared to act in sufficiently broad terms to elevate Europe’s banking sector to the next level,” she added.

(vib)