By the European Central Bank
The Eurosystem welcomes the European Commission’s targeted consultation
and supports an ambitious reform agenda to enhance the competitiveness of
EU banks, while preserving the resilience and stability of the financial system.
Amid increasing geopolitical and geoeconomic fragmentation, the Commission’s
consultation represents a timely opportunity to consider holistically what is necessary
to establish a truly integrated European banking market, which is a prerequisite for
achieving the long-term economic objectives of the Union. The continued
fragmentation of EU banking markets acts as a brake on European banks scaling up,
realising economies of scale and competing both within and outside the EU, and
limits private risk-sharing. To break the current deadlock, the Eurosystem calls
strongly for synchronised progress on key banking union components, taking
concrete steps towards the finalisation of a European Deposit Insurance Scheme
(EDIS), with a clear timetable for implementation, and fostering deeper capital
markets by progressing on the savings and investment union. This also requires
strengthening the crisis management and deposit insurance framework which should
proceed in coordination and synchronisation with deepening banking integration via
more harmonised rules and the removal of barriers to the free flow of capital and
liquidity in cross-border groups. These steps should be accompanied by adequate
safeguards promoting resilience holistically for credit institutions and their
subsidiaries, branches and consolidated groups, including through fair and timely
transfers of resources within groups, particularly in times of stress. These necessary
initiatives should have full regard to the diversity of European banks, which the
Eurosystem recognises as a source of systemic resilience.
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