Sewing: “Complexity is holding Europe back, we need the courage to make things simpler”

At the annual meetings of the International Monetary Fund (IMF) and World Bank in Washington, Christian Sewing, President of the Association of German Banks, called for a new era of simplified and competitive banking regulation in Europe. Regulatory conditions are the key factor in determining whether or not European banks remain competitive globally, he stressed.

“Europe must not put itself at a disadvantage when it comes to implementing international standards,” Sewing said, citing the example of discussions relating to stricter capital adequacy rules, which are unlikely to be introduced in the US. “This is not only a matter of potential competitive disadvantage for European banks, but above all it affects their ability to provide the economy with adequate financing options.”

He highlighted the tightening of financial supervision and regulation in Europe following the financial crisis, which has led to significantly greater stability. The goal now must be to dismantle excessive complexity and duplicated structures, as well as making regulation more efficient. “We should not be adding complexity to existing requirements, but simplifying them where possible. And doing so without compromising stability and security. This is the only way to create scope for more growth and investment in Europe,” Sewing said.

Sewing welcomed the increasing political focus on the competitiveness of European banks. It is now vital that policymakers and regulators continue to pursue this course together and with determination. Looking to the US and the UK, it is clear that other jurisdictions are already actively taking steps to ease the burdens and make things simpler.

Sewing also emphasised the strategic importance of a strong European financial industry. “A competitive financial sector is fundamental to Europe’s economic strength and strategic independence. By strengthening our financial hub, we are also strengthening Europe as a whole.”