The European Central Bank (ECB) will establish a task force charged with reviewing Europe’s banking rules, aiming to harmonise practices among member states to reduce costs and frictions.
As reported by Reuters this weekend, the task force will be chaired by ECB VP Luis de Guindos, who will lead the coordination of executives from the central banks of EU member states.
The initial objective of the task force is to gather feedback from central banks on which EU banking regulations have caused friction between member states and hindered business development.
Concerns about “unduly complex” banking laws and standards were raised during the EU’s 2024 meeting of Finance Ministers and Central Bank Governors.
“A comprehensive analysis of the implications of all the standards produced in Europe should be carried out … to ensure that they do not cumulatively add unintended layers of rules and expectations,” the governors warned the EU. .
The harmonisation of banking laws is required to improve business transactions and reduce trade barriers between member states. Central banks have highlighted that fragmented laws have impeded European businesses from expanding services into other member states.
Meanwhile, businesses have responded, stating that the lack of consistent laws has hindered European tech ventures from securing financing as easily as their US and Asian counterparts.
Despite efforts to harmonise regulations, the EU banking sector remains fragmented due to varying national laws, such as those governing insolvency, mortgage markets, and corporate governance.
ECB Supervisor Claudia Buch has highlighted that this fragmentation undermines banking efficiency and increases vulnerability to economic shocks.
While the ECB cannot unilaterally change regulations, the task force will make recommendations for consideration by European lawmakers in Brussels.
For 2025, the EU and ECB maintain that their key priority is navigating a complex economic landscape marked by inflation, trade tensions, and subdued growth.
The primary focus of the ECB will be managing inflation dynamics and making monetary policy adjustments.
Regarding ongoing global uncertainties, the ECB is also focused on maintaining financial stability to counter unwarranted market dynamics that could disrupt the uniform transmission of monetary policy across euro area countries.
