ECB Vice-President Calls for Simpler Banking Regulations to Boost Competitiveness

The European Central Bank's Vice-President, Boris Vujčić, emphasized the importance of resilience and integration in building a competitive banking system during his keynote speech at the ESRB conference. The ESRB was established 15 years ago as a response to the global financial crisis.

Vujčić noted that estimates suggest the median fiscal cost of a banking crisis is around 7% of GDP for advanced economies, and financial crises can lead to broader and persistent losses in output, employment, and investment. He argued that the EU's regulatory framework has become too complex and burdensome.

The ECB proposed simplifying the EU's regulatory frameworks by merging capital buffers into two categories: a non-releasable buffer and a releasable buffer. They also recommended simplifying the leverage ratio framework and aligning resolution requirements with global systemically important banks.