Paris: Europe’s bankers have spent more than a decade learning to live with an ever-thickening rulebook. On 16 June the European Banking Authority signalled that the tide may finally be turning, publishing a sweeping review of the bloc’s microprudential, macroprudential and resolution capital frameworks together with concrete proposals to make them leaner without weakening the buffers that absorbed the shocks of the past decade.
The headline ambition is to cut complexity while preserving resilience. The EBA insists the underlying architecture is sound, and it would keep the risk-based core intact, retaining Pillar 1 minimum requirements, the institution-specific Pillar 2 add-ons and Pillar 2 guidance. What it wants to change is the clutter that has accumulated around that core. Supervisory tools would be sharpened to focus on risks that are specific to a given bank or genuinely emerging, rather than duplicating protections that already exist elsewhere.
Some of the most technical proposals could prove the most consequential. The authority suggests stripping macroprudential elements out of the microprudential rulebook, where they have long sat awkwardly, and simplifying the leverage ratio by converting the Pillar 2 leverage requirement into a buffer and scrapping the separate leverage guidance. On the macroprudential side, it proposes merging the countercyclical capital buffer and the systemic risk buffer into a single releasable buffer governed by one common, high-level methodology, a change that would give national authorities a cleaner lever to pull when stress hits.
The resolution framework would also be tidied. The EBA wants to align the definitions of TLAC and MREL eligible resources, trim the number of metrics banks must track and simplify the adjustments that currently make MREL calculations a source of operational headache. None of this is a deregulation in the American mould; the stated goal is the same level of safety achieved with fewer moving parts.
The context matters. The review follows proposals in April to cut banks’ reporting burden and to design a lighter EU-wide stress test for 2027, part of a broader Brussels push to improve competitiveness without reopening the post-crisis settlement. Industry groups have welcomed the direction, arguing that compliance costs ultimately fall on borrowers and crimp lending to the wider economy. Supervisors counter that simplification must not become a back door to lower capital, and the EBA has been careful to frame its package as efficiency rather than indulgence.
Why it matters is straightforward. A simpler framework is easier to supervise, cheaper to comply with and harder to game, and it frees scarce supervisory attention for the risks that actually threaten stability. The danger is that consolidation blurs accountability or that a single merged buffer proves less nimble than the instruments it replaces. Critics also warn that every simplification round invites lobbying to weaken substance under the cover of streamlining.
For now the proposals are a report, not a law. They feed into the Commission’s reflection on the capital rulebook and would require legislative change to take effect, a process that will run well into 2027 and pass through the Parliament and member states. Banks will study the detail closely, because the line between a leaner rulebook and a looser one is precisely where the next supervisory battle will be fought.
