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Financing of the EU economy - Is the CMU on the right track?

Banking regulation under scrutiny: Evaluation of its implementation and impact

By Balz Burkhard - MEP, EPP Coordinator in the Economic and Monetary Affairs Committee, European Parliament

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The present set of the banking regulation is still not effective and targeted enough. The reasons are twofold. Firstly, there is a lack of thorough implementation and consistent application of agreed rules. Secondly, the different layers of regulation and their accumulated impact have not yet been evaluated.

Deliberations on future add-ons in banking regulation imply that the present framework is fully implemented and thoroughly assessed. As far as the implementation is concerned there are still efforts necessary to ensure that all instruments which the co-legislators agreed upon within the framework of the Banking Union will be fully enforced in the Member States, such as a credible bail-in tool including a 8% minimum requirement for own funds and eligible liabilities. At the same time, after six years of regulating in response to the financial crisis, all the different and complex pieces of regulation require a thorough assessment on how they fit and work together. The review shall also contribute to building a coherent and holistic framework for a successful Capital Markets Union. The European Parliament called upon the Commission to present an impact study by the end of this year. The purpose of this exercise is not to deregulate, but to evaluate and to improve the consistency, effectiveness and proportionality of the present rulebook, including its independencies with the financing of the real economy. The Parliament encourages the Commission to consider measures of this purpose in the upcoming revision of CRDIV and CRR.

The global competitiveness of the EU financial sector shall equally be addressed.

The global competitiveness of the EU financial sector shall equally be addressed in the impact assessment. The definition of a TLAC requirement will be crucial in strengthening the resolvability of large global banks, but it should be set in a way that allows for equal competition between EU banks and their main global competitors. There is still a lot to do, on EU and on global level, to make the financial system more stable, and at the same time to ensure a consistent, practicable framework for banks to provide competitive financial services for the European economy.