Europe’s co-operative banking sector has called on EU policymakers to slow the pace of financial regulations, and warned that growing complexity is placing strain on member-owned lenders.
In response to the European Commission’s Better Regulation initiative, which aims to improve how EU laws are made and implemented, the European Association of Cooperative Banks (EACB) said an accumulation of regulatory requirements and legislation has created operational pressures that disproportionately affect smaller, regionally focused financial institutions.
The EACB argues that overlapping rules, legal uncertainty and unclear implementation timelines risk undermining the diversity of Europe’s banking system and reducing the sector’s ability to finance regional development.
It is now calling for a “shift towards regulatory prioritisation” – “a temporary freeze on non-essential initiatives, fast-tracked assessments focused on material risks, and stronger ex ante coordination across legislative frameworks, especially for cross-cutting areas such as digitalisation, ESG and energy”.
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There should also be a ‘regulatory moratorium’ on new banking initiatives, it added.
In its position paper, the EACB said: “The sheer volume of technical standards, guidelines and Q&As has itself become a source of risk and legal uncertainty. Greater regulatory discipline, clearer mandates, realistic timelines, and well-defined boundaries for supervisory guidance are essential to restore clarity, proportionality and legal certainty.
“Ultimately, meaningful simplification must be operational, embedding proportionality by design and ensuring a level playing field, so that Europe’s banking sector remains competitive, diverse, innovative and resilient.”
