The European Central Bank (ECB) Governing Council has urged deeper integration of the EU banking sector, stressing that a more unified Single Market is essential to strengthen competitiveness, resilience, and long-term economic growth in the euro area.
In a press release dated 14 April 2026, the ECB said the euro area should operate more like a single jurisdiction, allowing capital and liquidity to move freely within cross-border banking groups. It noted that ongoing regulatory fragmentation and remaining barriers continue to hinder integration and limit economies of scale in the banking sector.
The ECB emphasized that resilient banks are a key foundation for sustainable growth and competitiveness, and argued that these should be achieved through harmonisation, integration, and scale rather than deregulation. It also warned that excessive complexity and fragmentation across member states are currently weakening competitiveness.
As part of its response to the European Commission’s consultation on EU banking sector competitiveness, the Governing Council reiterated proposals published in December 2025 to simplify EU banking rules. These include coordinated steps toward completing the banking union, particularly the creation of a European Deposit Insurance Scheme (EDIS) with a defined implementation timeline, as well as further progress on the savings and investments union.
ECB officials highlighted that stronger integration and cross-border competition would help banks achieve economies of scale and diversify their activities, while maintaining safeguards for financial stability. They also stressed that post-crisis regulatory reforms have improved bank resilience without restricting lending, and that capital requirements remain aligned with international standards.
The Governing Council proposed several regulatory changes, including converting directives into directly applicable EU regulations, merging macroprudential capital buffers, increasing proportionality for smaller banks, streamlining reporting requirements, and ensuring a more holistic approach to assessing overall capital levels.
Overall, the ECB concluded that a truly integrated banking market, combined with deeper capital markets, is essential for enhancing the EU’s competitiveness and financial stability.
