Finance
ECB's Donnery warns against watering down banking rules
Published by Global Banking & Finance Review®
Posted on April 29, 2025
2 min readLast updated: January 24, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on April 29, 2025
2 min readLast updated: January 24, 2026
ECB's Donnery stresses the need for strong banking regulations while exploring simplification. Resilience and investor clarity are key.
FRANKFURT (Reuters) -European Central Bank supervisor Sharon Donnery said on Tuesday she saw scope for making banking regulation simpler, but warned against watering it down.
The ECB has launched a task force, chaired by Vice President Luis de Guindos, that will look for ways of simplifying bank rules. Donnery is the third central bank representative this week to stress this should not amount to deregulation.
"We must never sacrifice the resilience that was so hard-won in the aftermath of the global financial crisis – neither in the name of alleged competitiveness, nor under the banner of simplification," she said. "This is a red line. And it must remain one."
De Guindos struck a similar tone in the European Parliament on Monday and Finnish ECB governor Olli Rehn, also a member of the task force, said banks should maintain "sturdy" capital buffers.
Donnery stressed the regulatory framework was already less strict for "small and non-complex" banks although she saw scope for "more proportionality".
"There may be scope for more proportionality in the European regulatory framework," she said. "But let me reiterate: rules should be as simple as they can be, but no simpler."
Donnery also said the regulation should be clearer about which investors bear losses when a bank goes under.
"Market participants’ ability to understand the consequences of the regulatory regime – for instance with regard to loss-sharing arrangements and supervisory restrictions when a bank’s solvency declines – can affect their willingness to invest," she said.
"And even in normal times, monitoring compliance with multiple regulatory metrics and understanding all their potential interactions can pose operational costs and challenges for banks and supervisors alike," Donnery added.
(Reporting by Francesco CanepaEditing by Mark Potter)
The main topic is the European Central Bank's stance on maintaining strong banking regulations while exploring simplification.
Sharon Donnery is a supervisor at the European Central Bank who emphasizes the importance of not weakening banking regulations.
The ECB's task force, chaired by Luis de Guindos, is focusing on finding ways to simplify banking regulations without compromising resilience.
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