- EU banking regulations are complex and expensive to comply with
- This situation inherently favors large banks, which can absorb the costs
- Some regulators argue for a second, lighter set of rules for smaller lenders
- Creating such a framework would challenge the push for a “unified” system
Over the past two years, European Union authorities have begun considering the issue of “proportionality” in banking regulation and supervision. The question is whether to continue the current one-size-fits-all approach. Should regulators impose the same rules across the entire spectrum of financial institutions or adapt rules to the specifics of banks – their size, complexity and relevance for financial stability? The idea is that smaller, less risky banks should be subject to simpler rules than the large, globally active, systemically important ones.