A competitive and resilient EU banking sector is vital to economic growth and to the functioning of deep and integrated capital markets. As the leading European capital market infrastructure and drawing on close engagement with clients and market participants, we believe that targeted and proportionate regulatory and supervisory measures are needed to enhance the competitiveness of EU banks and to ensure alignment with the objectives of the Savings and Investments Union (SIU). This supports economic growth and enables the transition to a greener, more digital economy while supporting the EU’s autonomy in defence, critical infrastructure and scale-up financing.
Challenges facing the EU banking sector
The EU’s implementation of international standards, including the Basel framework, is frequently more conservative and complex than in other major jurisdictions. This results in relatively higher capital requirements for EU banks, constraining their lending capacity and undermining their global competitiveness. At the same time, regulatory fragmentation, driven by divergent national rules and supervisory practices, raises compliance costs and hampers the development of truly cross‑border banking activities.
Persistent differences in consumer protection rules, insolvency regimes, taxation, reporting requirements, and collateral frameworks continue to create barriers to cross‑border banking within the EU Single Market. This fragmentation limits access by consumers and businesses to banking products and services across the EU, prevents banks from achieving economies of scale, and inhibits the provision of uniform, pan‑European offerings.
The regulatory framework must also better support innovation by enabling banks and other financial intermediaries to develop and deploy new digital products and services. Overly conservative or unclear approaches to digital assets and settlement processes risk pushing activity outside the regulated financial sector, weakening both competitiveness and financial stability.
Euronext’s view on EU banking competitiveness
In our response to the European Commission’s targeted consultation, Euronext, drawing on extensive engagement with its clients and market participants, emphasises the need for a strong and resilient banking sector operating alongside deep, liquid, and well‑functioning capital markets. These two pillars are mutually reinforcing and essential for financing the real economy, supporting growth, and sustaining EU competitiveness.
Euronext believes that a well-calibrated prudential framework for all types of financial intermediaries will ensure deeper and more liquid markets and will support other vital parts of the SIU.
Efficient capital allocation is a critical determinant of the EU’s ability to attract and retain listings and an indispensable complement to primary market financing. Well-functioning secondary markets underpin market liquidity and price formation, enabling trading venues to develop and scale new products. This is essential for fostering financial innovation and for mobilising market‑based financing to support the EU’s global competitiveness.
Against this backdrop, Euronext considers that a more proportionate, coherent, and harmonised regulatory framework is necessary to safeguard financial stability while strengthening the competitiveness of the EU’s financial system.
Euronext therefore recommends adopting a forward‑looking, and technology‑neutral approach to regulation and supervision, particularly with regard to digital and tokenised assets and the use of new technologies. Such an approach would support innovation within the regulated sector, while maintaining high standards of market integrity and investor protection.
For more information, visit the European Commission’s consultation page.