ECB: Frank Elderson: Interview with Die Presse

The summary above is from the announcement ECB published on October 20, 2026.

What the announcement says

Almost without exception, banks complain about the high cost of regulation. Do they have a point? Or are these costs essential for the stability of the banking system?

We shouldn’t forget the financial crisis of 2008. The costs were enormous, not only for banks, but also for households, firms, taxpayers and society as a whole. Those costs far outweigh the cost of regulation. The regulatory reforms introduced after the crisis have made European banks far more resilient. Banks today are well capitalised, have high liquidity levels and are more profitable, on average, than for many years.

But wouldn’t it be possible to simplify supervision without putting the stability of the sector at risk?

It’s true that regulation and the supervisory framework have become more complex over time. One of the reasons for this is that the banks themselves differ greatly and operate in an increasingly complex environment. The risks have also become more complex, ranging from geopolitical tensions, cyber risk and climate and nature risks through to artificial intelligence.

But complexity is not an end in itself. We do of course ask ourselves constantly whether we could still achieve our objectives as supervisors with simpler rules and regulations. And we’ve already taken a whole range of measures. We’ve reduced reporting obligations and accelerated processes. But it’s important to remember that simplification is not the same as deregulation. And it is resilience that is the foundation of sustainable growth and competitiveness.

Regulation means costs, and costs can be a competitive disadvantage. What do you see as the biggest obstacles to international competitiveness for European banks?

The biggest obstacle to European competitiveness is fragmentation. Although we have made progress, Europe still doesn’t have a truly single, integrated banking market. Cross-border banking activities remain limited. Banks are not able to fully benefit from economies of scale, greater diversification or more efficient allocation of capital and liquidity across the European economy. This fragmentation leads to higher costs, lower efficiency and fewer opportunities to achieve the kind of scale that is needed to compete internationally. This doesn’t just affect the banking sector but many other sectors besides. We talk about the Single Market, but the reality is the market is not yet truly single.

If fragmentation is the diagnosis, integration is the remedy – not deregulation. We need to complete the Single Market, the savings and investments union, and the banking union, including establishing a European deposit insurance scheme.

Simplification and integration are two sides of the same coin, which is the competitiveness agenda. We need both and we need both at the same time. This is why it is crucial that the European Commission’s banking reform package keeps both sides together.

How much would a fully integrated banking market actually encourage cross-border lending? Local banks know their customers best. And competition is already really strong in countries like Austria.

I haven’t got a crystal ball. What is clear, though, is that a single jurisdiction with several hundred million customers would lead to more competition, better products and more risk sharing. Banks would also be in a position to fund future-oriented investments; the challenges associated with the climate and nature crises, the energy transition and demographics are enormous.

Today, differences in legal frameworks, insolvency regimes and consumer protection rules still make cross-border banking unnecessarily complex and costly. No one is forcing us Europeans to keep these obstacles in the market. We’ve built them ourselves – we can, and should, also remove them and do so urgently. And with the enormous investment challenges in front of us, we’ve no time to lose.

Other countries could relieve the burden on their banks by implementing Basel III more loosely. Wouldn’t this cause Europe to become less competitive?

ECB

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Read the full announcement on ECB

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