The ECB has published the recommendations of its High-Level Task Force on Simplification, which aim to make the EU’s regulatory and supervisory framework simpler, more consistent and more efficient, while keeping the banking system strong and resilient. These proposals will now be submitted to the European Commission.
Key Highlights
Fewer and simpler capital requirements
- Merge existing capital buffers into just two: a permanent buffer and a releasable buffer that authorities can lower during downturns.
- Streamline the leverage ratio from four components to two.
- Improve the quality of banks’ capital and simplify how capital stacks are structured.
A simpler regime for smaller banks
- Expand and streamline the existing EU small-banks regime to reduce unnecessary complexity while maintaining prudence.
Stronger EU-wide consistency
- Encourage completion of the banking union and the savings & investment union to reduce fragmentation.
- Recommend automatic recognition of macroprudential measures across countries.
- Align resolution requirements for all banks more closely with international standards.
More harmonised, flexible supervision
- Move from directives to directly applicable regulations to ensure uniform rules across the EU.
- Harmonise key supervisory areas such as licensing and governance.
- Give supervisors more flexibility and simplify EU-wide stress tests.
Much simpler reporting for banks
- Develop an integrated European reporting system so banks report data only once.
- Share data more effectively between authorities.
- Introduce materiality thresholds to avoid resubmissions for minor issues.
- Review reporting requirements every 3–5 years.
