Six countries (the E6 group) submitted their proposals following the European Commission’s publication of a new strategy for the banking sector, according to the Financial Times. Brussels proposes simplifying the conditions for the growth of European banks, expanding cross-border operations, and increasing the competitiveness of the financial sector.
However, the governments of Germany, France, Italy, Spain, the Netherlands, and Poland consider these measures insufficient. According to the Financial Times, they are proposing to revise some of the requirements introduced after the 2008 global financial crisis.
Specifically, this involves lowering certain supervisory capital requirements for banks, as well as revising the rules for calculating capital for mortgage loans and loans to companies without an external credit rating.
Disagreements with the European Commission Persist
Another point of contention remains the application of the Basel international standards. The E6 countries believe that the EU should adjust its own rules if the U.S. or the U.K. apply the standards less strictly, thereby creating competitive advantages for their banks.
At the same time, the European Commission is currently maintaining its course toward preserving uniform international rules and is not promising to ease requirements in kind.
Positions also differ on the issue of further banking market integration. Brussels proposes to facilitate the movement of capital and liquidity within cross-border banking groups, as well as to resume efforts to establish a European deposit insurance scheme.
The largest EU member states are taking a much more cautious approach to these initiatives, insisting that risks should primarily remain with the banks’ shareholders and creditors, rather than being redistributed among countries.
Furthermore, the E6 document does not support the European Commission’s proposal to limit the ability of national governments to block cross-border bank mergers and acquisitions.
The Logic of Survival
The discussion signals the start of a new phase in the review of banking regulation in the European Union. After many years of tightening capital requirements, the focus is gradually shifting toward enhancing the competitiveness of European banks amid the growing strength of U.S. financial groups and the need to finance economic growth.
For Moldova, this discussion is of interest in the context of European integration and the gradual alignment of national banking legislation with EU standards. Any changes to the European regulatory framework may be taken into account in the future as Moldova’s financial regulation continues to evolve.
