EESC develops vision for reinforcing competitive edge of EU financial sector

In the pursuit of a more competitive EU economy, the financial sector – and especially banking – emerges as the backbone, wielding substantial influence over both financing and pivotal transitions towards sustainability. In an opinion adopted in plenary, the European Economic and Social Committee (EESC) highlights key ways to fortify this sector and reinforce its contribution to the EU's strategic autonomy and transformative goals.

As the EU transforms its economy, it seeks a competitive and stable financial system. However, despite efforts like incorporating a competitiveness check into future policies, and initiatives such as the better regulation framework under the REFIT programme, challenges persist. The incomplete Banking and Capital Markets Unions hinder market unity, and EU banks lag behind globally, explains rapporteur Antonio García del Riego. Persistent disparities call for thorough evaluations and enhancements to ensure a competitive and resilient EU financial sector.

Fair competition

Stability is the cornerstone of growth and competitiveness. Strengthening regulatory frameworks is crucial to ward off disruptions, with balanced oversight vital to protect the diversity of the EU's banking sector, a source of resilience. The EESC emphasises the pivotal role of fair competition in maintaining market stability and attracting foreign investment. Achieving equilibrium between foreign and domestic banks is key, with a focus on assessing digitalisation and funding depth as essential markers for sustained market strength.

Competitiveness checks

The EESC applauds the European Commission's decision to include a competitiveness check in future EU policies and laws, aiming for strategic autonomy. Yet, this newly introduced check demands precision. It should not be invoked to deviate from international standards, like the Basel III framework. Rather, it should ensure that proposals strengthen competitiveness, job creation and sustainable growth. This is crucial, especially given the EU banking sector's comparative underperformance globally. The EESC advocates aligning the four dimensions of the competitiveness check (market functioning and how it works in terms of price formation and costs; the specific impact on SMEs; the impact on international competitiveness; and the impact on the capacity to innovate) with elements specific both to the financial sector and to the competitiveness of the European economy, given its high reliance on banks, which account for over 70% of total funding in the EU.

The Capital Markets Union

Completing the Capital Markets Union (CMU) is an urgent priority to counter market fragmentation and harmonisation challenges. This step will not only fortify the EU's financial stability but will also expedite integration. The CMU's completion aligns with broader goals, strengthening the EU's economic foundations and providing a unified platform for seamless financial operations across Member States.

With this own-initiative opinion, the EESC highlights the need for a cohesive evaluation methodology that considers the cumulative effects of regulatory measures on the EU's competitiveness. Additionally, it stresses the importance of effectively involving stakeholders in impact assessments to ensure a more inclusive and informative process. The Committee also underscores the importance of robust data collection and evaluation to drive informed decision-making for the sector's advancement.

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