Amendments to financial regulation to facilitate economic recovery post Covid-19 - Related Opinions
While acknowledging the progress made by the Commission in taking account of smaller and less complex banking institutions in its recent regulatory measures, the EESC believes it would be useful to further increase the proportionality of banking rules, without sacrificing the effectiveness of prudential rules.
The EESC endorses the recent decision to push back the date for implementing the Basel III accord, and feels that when the time comes, the new provision on capital requirements should be transposed in a way that caters properly for the diversity of banking business models in Europe.
The EESC welcomes the Commission's package, a centrepiece in the EU offensive to address the persisting issue of NPLs and fundamental to progress towards the Banking Union. The EESC agrees with the application of statutory prudential backstops as a preventive measure to ensure that credit losses on future NPLs are sufficiently provisioned but warns against a "one size fits all" approach. The Committee recognises that the Commission gives an answer to many of the problems of fragmented NPLs secondary markets in the EU, however, the Committee is of the view that regulators must not encourage the sale of NLPs. The EESC welcomes that the right to a fair trial in a national court is ensured if it is necessary and if the application of the out-of-court procedure as proposed in the directive is restricted.
The EESC welcomes the new set of measures proposed by the European Commission to complete the Economic and Monetary Union (EMU) and move towards an optimal monetary zone. The EESC supports the various proposed goals for reinforcing the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM). The EESC welcomes that the present communication provides scope for a broader discussion and for a phased approach to implementing the European Deposit Insurance Scheme (EDIS) and underlines the importance not to lose momentum in implementing the Banking Union. Finally, the EESC reiterates its commitment to a diverse financial ecosystem in which the large pan-European players coexist with small and medium-sized banks and other non-banking entities that focus reliably on the financing of the real economy on an equal footing, in an environment of much reduced systemic risk.
The EESC very much welcomes the Commission’s package of proposals and hopes that it will contribute effectively to complementing the work done after the crisis to reform the financial sector. The Committee welcomes the underlying holistic and integrated approach and believes that the proposed measures will undoubtedly help strengthen Europe’s prudential and resolution framework for banks. The Committee also these proposals will enable progress to be made not only in further advancing the Banking Union, but also in implementing its third pillar, the European Deposit Insurance Scheme and that certain specific adjustments in the proposals should facilitate the pursuit of a Capital Markets Union.
The EESC welcomes a banking union to place the banking sector on a more sound footing and restore confidence in the euro as part of a longer-term vision for economic and fiscal integration. Shifting the supervision of banks to the European level is a key part of this process, which must subsequently be combined with other steps such as a common system for deposit protection, and integrated bank crisis management. A banking union would represent a step towards the euro zone and the EU as a whole embarking on a virtuous cycle overcoming its design flaws and enabling the single market to regain competitiveness.