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ECB Vice-President Boris Vujčić used an Oct. 2 speech at the European Systemic Risk Board’s annual conference to argue for simpler EU banking rules and stronger financial integration. He said simplification should preserve bank resilience, and described a sound banking system as a strategic advantage for Europe. The supplied speech text ends before his discussion of competitiveness is complete.
European Central Bank Vice-President Boris Vujčić called for simpler EU banking rules and a more integrated single market in a keynote speech on Oct. 2, arguing that reform should reduce complexity without weakening financial resilience. Speaking at the European Systemic Risk Board’s 10th annual conference, he said integration and economies of scale, rather than looser safeguards alone, are important to the competitiveness of European banks.
Vujčić said the ECB Governing Council had put forward recommendations late last year to simplify the EU’s regulatory, supervisory and reporting frameworks for banks. The proposals include consolidating several capital buffers into two categories: a non-releasable buffer and a releasable one. The ECB also proposed reducing the leverage ratio framework from four capital-stack elements to a 3% minimum requirement and one buffer.
On bank resolution, the ECB recommended aligning the EU’s minimum requirement for own funds and eligible liabilities, known as MREL, more closely with the international total loss-absorbing capacity framework, or TLAC. Vujčić said that would bring requirements for EU banks closer to those for global systemically important banks without reducing resources available in resolution. The speech also proposed a dedicated, more proportionate regime for smaller banks, calibrated conservatively to preserve resilience.
He cited ongoing supervisory changes as another part of the simplification effort. The ECB’s supervisory arm, he said, is streamlining guidance and plans to discontinue about 40 of more than 100 guidance documents. Separately, the European Commission has published a communication on the competitiveness of the banking sector and the single market, an initiative Vujčić said the ECB welcomed.
Simplification Without Weaker Safeguards
The speech addresses a central policy tension for European banking: rules need to protect the financial system, but their complexity and compliance burden can also weigh on institutions. Vujčić acknowledged industry arguments that EU regulation is too cautious and that capital requirements can constrain lending. He did not endorse simply lowering safeguards; instead, he argued that simpler rules can maintain resilience while making supervision and compliance less burdensome.
His emphasis on integration also shifts the competitiveness debate beyond individual banks’ regulatory costs. A more unified market could allow banks to operate at greater scale, while fragmented markets can limit that potential. For households and businesses, the debate matters because banks are a major source of finance, and the resilience of the financial system affects its ability to support lending through economic stress. The speech sets out a policy argument, not evidence that the proposed changes will produce a particular increase in credit or competitiveness.
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Why the ESRB Was Established
The ESRB was created 15 years before the speech as the EU’s body for macroprudential oversight: monitoring risks across the financial system rather than supervising only individual firms. Its establishment followed recommendations from the 2009 de Larosière Group and came after the global financial crisis and Europe’s sovereign debt crisis exposed the broad costs of financial instability. Vujčić said he had contributed to the ESRB’s work for 13 years.
To explain the case for maintaining safeguards, Vujčić cited estimates putting the median fiscal cost of a banking crisis at about 7% of GDP in advanced economies. He stressed that this measure captures only part of the damage, which can also include persistent losses in output, jobs and investment. That figure is an estimate he referenced in the speech, not a forecast of the cost of any current crisis.
Vujčić also recalled that proposals for simpler banking rules had been discussed within the ESRB more than a decade ago, but faced resistance. He said regulation had become more complex over time. His speech frames simplification as compatible with a resilient system, provided any revised rules retain adequate safeguards.
“The fact that our banks are profitable and of sound standing today is a strategic advantage for Europe.”
— Boris Vujčić, ECB Vice-President
The Speech’s Unfinished Competitiveness Case
The supplied source text ends during Vujčić’s discussion of how to measure bank competitiveness, after he lists several dimensions. It does not include the remainder of his argument on integration, so the details of any further proposals or conclusions cannot be established from the material provided. The speech also does not specify the timing or legislative path for the ECB’s recommendations, or quantify how the proposed changes might affect lending, costs or bank performance.
The recommendations are proposals, not enacted EU rules. Their adoption would depend on decisions by the relevant EU institutions. It is also not clear from the supplied text how the proposed simpler regime for smaller banks would be calibrated in practice.
EU Follow-Up on Banking Reform
The next steps concern how EU policymakers respond to the ECB’s recommendations and the European Commission’s work on banking-sector competitiveness and the single market. Any changes to bank capital, resolution or reporting requirements would require further policy and legislative decisions; the speech does not set out a timetable for those decisions.
The ECB’s supervisory arm is separately pursuing the guidance changes Vujčić described, including plans to discontinue around 40 documents. Further developments will show how those measures are implemented and whether regulators can reduce complexity while maintaining the financial resources and safeguards intended to protect the system.
Key Questions
What did Boris Vujčić propose?
He argued for simpler EU banking rules, including consolidated capital buffers, a streamlined leverage ratio framework, closer alignment of MREL and TLAC requirements, and a more proportionate regime for smaller banks.
Did Vujčić call for lower bank safeguards?
Not in the supplied speech text. He said rules could be simplified while maintaining resilience, and specified that the proposed smaller-bank regime should be calibrated conservatively. He also said resolution simplification should not reduce resources available in a bank resolution.
How many ECB supervisory documents could be discontinued?
Vujčić said the ECB’s supervisory arm was streamlining guidance and planned to discontinue around 40 documents out of more than 100.
Are the proposed banking-rule changes already in force?
No. The speech describes recommendations and ongoing supervisory work. The material provided does not say that the proposed legislative changes have been adopted or provide a timetable for their adoption.
Why does financial integration matter to bank competitiveness?
Vujčić argued that a more integrated single market can foster economies of scale. He also said competitiveness includes sustained profitability, efficiency, innovation and capacity to invest, rather than a single measure.
Source: primary
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