Austria’s top central banker wants Europe to stop playing catch-up on crypto and financial regulation.
Martin Kocher, who also sits on the European Central Bank’s (ECB) Governing Council, said on Tuesday in Vienna that the growing weight of crypto businesses is dragging in new demands for rules, but instead of adding more, the region should start cleaning up the mess it already has. He was speaking at a financial oversight event hosted by Austria’s regulator.
“Realistically, the focus will have to be on limiting potential growth,” Martin said. “But it would be important to review the existing regulations and, for example, phase out unnecessary reporting and documentation requirements.”
He made it clear that Europe needs to rethink how many rules are even useful anymore. Some are outdated, others just clog up the system. The main idea? Don’t overcomplicate things unless you have to.
Finance ministers and central bankers had already been discussing this just last week in Copenhagen. They’re worried that Europe’s banks are falling behind the U.S., where rules are being rolled back.
The problem, according to Martin, is that the regulatory structure is just too damn bloated, and nobody has taken the time to clean it out. He said fixing this would also help the ECB make its monetary policies actually reach people across the bloc, especially by reducing the risk gap between member countries.
“Today, we still see too many national differences in capital availability, regulatory frameworks,” Martin said. “These differences hamper the transmission of monetary-policy impulses.”
Germany’s Nagel calls for simpler rules, not less oversight
Joachim Nagel, head of Germany’s Bundesbank and also part of the ECB’s Governing Council, doubled down on this on Friday in Frankfurt. He said Europe needs to stop dragging its feet on simplifying the post-crisis rules. “We should boldly move forward on this path,” Joachim said. “Simplification is feasible, according to the motto: as complex as necessary, as simple as possible.”
Joachim is part of a task force the ECB launched back in April. The group is working on making banking rules easier to follow without stripping away safety. His idea? Only common equity should count toward a bank’s main capital requirements. That means fewer overlapping demands and fewer moving parts. Tier 1 and Tier 2 capital tools could still be used, but only to handle resolution cases, not for regular capital compliance.
That idea is already turning heads at the ECB. Bloomberg reported Tuesday that Germany’s proposal has become one of the most controversial topics in the ongoing push to fix the ECB rulebook. Some officials think it could force certain banks to raise more capital than they expected, and might even break progress on aligning rules across Europe.
Joachim’s second suggestion is to combine a bunch of capital buffers into a single one. He said this wouldn’t scrap national regulators’ roles, it would just make the whole system less messy. The task force, which includes governors from France, Italy, Finland, and Estonia, plus ECB Vice President Luis de Guindos and board member Sharon Donnery, already gave an interim report to the ECB’s Governing Council in July. The final version is due in December.
The pressure to act comes as banks in the eurozone are sweating over the deregulation trend sweeping through the U.S. and U.K. While central bankers like Martin and Joachim are driving the technical part of the debate, actual law changes will come down to the European Commission and parliament.
Still, Joachim isn’t waiting for politicians to move first. “We’re at the beginning of a long road,” he said. “I want to advance the discussion with our national and European partners.”
