The European Commission wants a new financial system, and the first ideas have emerged.
The flexible banking sector is essential for economic growth in the European Union. However, according to a recent assessment by the Commission, despite the reforms, the fragmentation and bureaucracy of the system have made it more difficult for banks to operate. This hinders technological development and investment. Brussels is working on a comprehensive reform package to remove bureaucratic obstacles, simplify cross-border operations, and rethink the deposit insurance system.
In order for the European Union’s economy to grow, remain innovative, and maintain its strategic independence, a resilient and robust banking sector is essential. While the reforms of the past fifteen years have made the EU’s financial institutions more stable, the European Commission’s recent assessment, dated July 17, indicates that the system has, in fact, become a hindrance to its own development. The fragmentation across national borders, excessive bureaucracy, parallel data provision, and rigid adherence to international standards all restrict the banks. This makes it more difficult for them to finance the continent’s technological and investment catch-up. Brussels is therefore working on a comprehensive reform package. The aim is to remove the bureaucratic obstacles without sacrificing financial stability: to facilitate cross-border operations, simplify capital requirements, and rethink the deposit insurance system. This would create a healthier balance between excessive risk aversion and stable economic financing. The topic will also be discussed at the Portfolio’s Future of Finance 2026 conference on September 23.
