ECB Supervisory Board Chair Danièle Nouy called on regulators and supervisors to adapt rules to the changing conditions for access to the banking market brought on by technological progress.
"Digitalization is taking apart the value chain of banking," she said Sept. 6 in a speech at the 22nd Handelsblatt banking summit "Banken im Umbruch" in Frankfurt. She added that as the "technical and financial hurdles have become a bit lower," new companies are emerging that may not necessarily run fully fledged banking operations yet still create a more competitive market. "Regulators and supervisors have to react to this change," Nouy said.
The ECB has already embraced the change and will soon publish a guide on bank licensing that also covers fintech, she added. Yet, she also noted that, in Europe, a big barrier to leveling the playing field is that various countries still have very different regulatory frameworks.
"Neither regulation nor supervision have been fully harmonized yet. This is an issue that policymakers must address if they are serious about creating a European banking union," she said. "And one can even go further — tax systems and insolvency laws differ widely between countries. This, too, stands in the way of a competitive, efficient and wholly European banking market."
More European rules
Commenting on the recent bailout of Italy's Veneto Banca SpA and Banca Popolare di Vicenza SpA, she rejected the notion that those cases had shown up weaknesses in the existing European resolution rules, but argued that insolvency laws and a number of other frameworks that are in the hands of national legislators need to be harmonized.
"We have still about 45 national options that are in the hands of legislators that we have not been able to address because we are just the supervisors, not the legislators," she said. "Indeed, we need more Europe and more European rules and less national frameworks."
Nouy defended the European Deposit Insurance Scheme and said many eurozone countries that currently oppose it would change their minds if they were put in a certain position.
To illustrate the point, she gave the hypothetical example of a London-based bank moving the headquarters for its entire European operations to a small country because of Brexit. "Is it totally fair that the taxpayer money, the deposit guarantee scheme of that small country is used to reimburse everybody [in the case of bank failure] when the bank will not be supervised or resolved by the national authorities?" she asked. "I'm sure that this country might change its mind of not supporting the deposit guarantee scheme."