France, Germany, and Italy Urge EU to Scale Back Banking Regulations for Global Competitiveness

France, Germany, and Italy are pressing the European Union to ease its upcoming banking regulations in a bid to strengthen the bloc’s global competitiveness. In a joint letter sent to the European Commission, the finance ministers of these three major EU economies argue that reducing regulatory burdens is crucial for ensuring that European banks can better compete internationally.

Dated September 24 and obtained by POLITICO , the letter calls on the EU to prioritize making its banking systems more competitive. “The more competitive our banking systems, including national champions, the better equipped they will be to finance key European goals,” the finance chiefs wrote, emphasizing the role of banking in supporting the broader economic ambitions of the bloc.

This push for regulatory relaxation comes amid growing concern from European leaders like French President Emmanuel Macron, who has warned that the EU risks falling behind major global powers such as the U.S. and China. Macron recently advocated for a more protectionist approach to safeguard the EU's economic relevance on the world stage.

The three countries are proposing a temporary halt on new regulations to allow the European financial sector more flexibility. In particular, they suggest reconsidering the EU’s adoption of the Basel global banking standards, especially as implementation in the U.S. has been delayed due to lobbying from the American banking industry.

The letter also calls on the European Commission to draft legislation that would enable changes to these standards if the U.S. takes a divergent path. The potential return of Donald Trump to the U.S. presidency has heightened concerns, as a second Trump administration may choose to abandon the regulations altogether.

The Basel standards, which were designed to enhance the safety and stability of banks following the 2008 financial crisis, are scheduled to take effect in 2025. However, some elements of the rules have already faced delays, and the upcoming changes in EU leadership could further influence the timeline and implementation of these regulations.

Critics of the proposal argue that scaling back these banking rules may lead to short-term gains at the cost of long-term financial stability, warning that loosening regulations could increase the risk of future financial crises.

By fLEXI tEAM