Overall, our existing rules for banking regulation are not too onerous. But they can be fragmented, complicated and sometimes contradictory. This is what we are addressing with the High-Level Task Force proposals, said Bundesbank President Joachim Nagel upon publication of the report by the European Central Bank’s High-Level Task Force on Simplification. We broadly agree that deregulation at the expense of financial stability is not an option. Our focus is on simplifying regulation, supervision and reporting, including disclosure.

The report contains 17 recommendations on how to simplify the Eurosystem’s regulatory and supervisory framework. They include proposals on capital requirements, a standardised EU stress test methodology and further progress on the savings and investments union.

The European banking sector has to be efficient and competitive – as well as resilient to unexpected shocks. High regulatory standards play a significant role in the stable ratings of European institutions, said Michael Theurer, the Bundesbank Executive Board member responsible for banking supervision.

The Bundesbank has been actively involved in the discussions, highlighting key issues such as the introduction of a simplified regulatory framework for small banks (EU small bank regime), as well as the simplification and consolidation of capital requirements. It also supports various initiatives aimed at simplifying the reporting system to ease the burden on institutions.

Moreover, the Bundesbank will remain committed to preserving the stability and resilience of the European banking system in future. Stability and resilience in the financial system are crucial competitive advantages, especially in the current setting. That’s why it is important to avoid a regulatory race to the bottom, said Mr Theurer.

Background:

The Governing Council of the European Central Bank created the High-Level Task Force on Simplification to draw up proposals for simplifying banking regulation, supervision and reporting by the end of 2025. The first recommendations have now been submitted to the Governing Council. The next step will be to present the final proposals to the European Commission.