Later this month, the European Banking Authority (EBA) plans to publish 21 proposals and expects to get results by the end of the year. Most of these ideas, according to Ettl, could be rolled out through cooperation with the European Commission within the next year.
The European Banking Authority, regulators, and supervisors are working to create a balance between the need to oversee the banks and the realities of daily operations and changing markets. The EBA’s evolving approach involves people making judgments by giving supervisors more flexibility. The EBA recognizes that modern banking is complex and that real-world conditions can’t always be addressed by rigid rules alone.
This shift is partly coming from both within the industry and from outside Europe, as US regulators have reduced their grip. The real challenge, however, is finding a practical middle ground that makes rules simpler and more adaptable, while never forgetting that the ultimate goal is to keep banks safe.
At a recent conference in Vienna, Vice Chairperson Helmut Ettl highlighted a reason to recheck and simplify existing rules, so that it is more understandable and practical for today’s environment. Instead of regulating every detail, Ettl argued that supervisors should have more room to use their judgment.
Later this month, the European Banking Authority (EBA) plans to publish 21 proposals and expects to get results by the end of the year. Most of these ideas, according to Ettl, could be rolled out through cooperation with the European Commission within the next year.
Europe has been facing growing pressure to reduce the regulatory load on banks, especially as the United States has started reducing its rules. This shift in the US has raised concerns in Europe about losing its competitive edge. While some regulators are in favour of easing the burden, many are cautious about removing rules that give them financial stability.
A central banking task force has been getting a lot of attention, but reports suggest that at least one of its key proposals is controversial and could take years to implement.
The EBA’s initiative, on the other hand, is designed to deliver results more quickly since it doesn’t require rewriting core legislation. Instead, the authority will focus on updating secondary rules, many of which haven’t been reviewed in well over a decade.
These proposals still need input from a range of stakeholders, but Ettl expressed optimism that they could mark a significant step forward.
At the same time, leading German bankers are pressing the government to cut through bureaucracy and encourage more investment. Speaking at a financial conference in Frankfurt, Alexander Mayer, who heads JPMorgan Chase in Germany, said investors are ready to act if the government and the EU create the right environment. He believes deregulation is the most effective way to promote growth.
Other top executives from Barclays, Goldman Sachs, and Deutsche Bank agreed, stressing that Germany needs to remove obstacles that hold back investment.
The new government, which is under Chancellor Friedrich Merz, announced far-reaching fiscal reforms and ambitious large-scale investment plans. The plan was to modernize the country’s aging infrastructure. Many business leaders appreciated this new move, which differs from past austerity measures, as it allows them to see Germany strengthen its competitive position.
Nevertheless, doubts remain about the government’s ability to push through tough reforms, such as reducing social spending and delivering on promises to lower energy costs.
According to Goldman Sachs’ Jens Hofmann, attracting more private investment into public projects could give the economy a further boost. Adjusting regulations to allow this could bring in significant international capital.
Recent data reports that private-sector activity in Germany grew at its fastest rate in sixteen months in September, driven largely by a rebound in services. The S&P Global index for the German economy climbed to 52.4, comfortably above the level that signals growth.
In spite of seeing so many continuous challenges, business leaders and policymakers are still hopeful since being competitive was the top priority for the board members.
