EBF calls for urgent simplification of Europe’s banking regulatory framework

A pivotal moment for Europe’s competitiveness

The EBF underlines that Europe stands at a critical juncture. In a world shaped by geopolitical tensions and renewed competition for economic leadership, the ability of the European Union to finance growth, innovation, sustainability and security will depend on a framework that remains effective, predictable and proportionate.

Banks, the EBF recalls, continue to play a central role in financing the European economy. Ensuring their capacity to support households, businesses and long-term investment is therefore a strategic priority.

Regulatory complexity has reached unsustainable levels

According to the EBF, the regulatory and supervisory landscape has expanded through overlapping initiatives from multiple authorities, increasing national discretion and gold-plating, additional supervisory capital add-ons, and growing reporting and compliance burdens.

This accumulation of layers is creating unintended consequences, including reduced competitiveness, rising administrative costs and diminished capacity for banks to support economic growth.

The letter notes that, between 2021 and 2024, additional capital required through supervisory discretionary measures increased by more than €100 billion across a sample of major European banks, representing more than €1.5 trillion in potential financing capacity that could not reach the real economy.

EBF priorities for simpler and more competitive regulation

To support the Commission’s simplification agenda, the EBF sets out a series of priority actions, including:

• reviewing duplicated capital requirements and increasing predictability
• preserving the consistency of the EU capital framework
• simplifying macroprudential buffers that constrain lending
• recalibrating MREL requirements against international standards
• improving the coherence of EU digital and cyber regulation
• reducing fragmentation and barriers within the Banking Union

The objective, the EBF stresses, is not weaker oversight, but rather a framework that better supports Europe’s strategic autonomy, resilience and long-term prosperity.

ABBL contribution: proposals towards smarter financial regulation

This European call echoes the ABBL’s own commitment to regulatory simplification. In April 2025, the ABBL published its position paper “Proposals towards smarter financial regulation in Europe”, structured around five policy priorities and forty concrete proposals.

By promoting more proportionate, coherent and innovation-friendly rules, the ABBL aims to contribute constructively to EU-level discussions and to support a robust financial sector in Luxembourg and across Europe.