Efficiency over excessive complexity

The competitiveness of European financial institutions is suffering from the costs of high regulatory burdens and inefficient supervisory requirements. In its latest discussion paper, the German Banking Industry Committee (GBIC) demonstrates how better rules for banks can ensure scope for more growth and investment in a sovereign Europe while, at the same time, maintaining stability.

Financial institutions are the beating heart of the economy. Stability, which is a vital factor in performing the task of circulating capital, has been strengthened in recent years through a series of measures. However, little consideration has been given to the fact that these measures might impair or even fundamentally jeopardise the competitiveness and profitability of banks at the national and international level. Furthermore, the European approach to supervision has become excessively bureaucratic and rigid by international standards. A comprehensive review of the framework is therefore necessary. In its paper, the GBIC identifies specific areas of action where duplicate regulations and inefficiencies cause unnecessary burdens and puts forward proposals for swiftly strengthening the competitiveness of the European financial industry. 

“Right now, as Europe faces enormous challenges such as strengthening its economy and shoring up its defence capabilities, we need regulations that enable both competitiveness and financial stability,” said Heiner Herkenhoff, CEO of the Association of German Banks, this year’s coordinator of the German Banking Industry Committee. “It is therefore vital that there is a greater focus on more regulatory efficiency, transparency and proportionality,” said Herkenhoff.