Interview with Het Financieele Dagblad

Interview with Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, conducted by Daan Ballegeer and Rutger Betlem on 19 May 2026

10 June 2026

Published in Het Financieele Dagblad on 3 June 2026.

[The interview is introduced with a brief account of the collapse of Amsterdam Trade Bank in 2022, presented as an example illustrating the complexity of financial supervision beyond standard financial metrics. The introduction includes a quote by Frank Elderson, reproduced below.]

Deregulation – even if you frame it as modernisation or simplification – is a no-go. We should not forget the lessons of the financial crisis. Moreover, as a supervisor we are not there solely to focus on financial risks. Amsterdam Trade Bank has made that abundantly clear. Non-financial risks in particular are often an excellent predictor of future financial problems. They have the unfortunate habit of not manifesting themselves as financial risks for a very long time – and then suddenly they do. By then, it is often too late.

When the ECB talks about simplification, banks tend to hear deregulation and lower capital requirements. Are you even speaking the same language?

If deregulation leads to lower capital requirements, then we do not consider that a good idea. There is no convincing evidence – quite the opposite, in fact – that a well-capitalised banking sector would constrain lending to the real economy.

Do banks have a point that they could extend more credit if they were not required to hold as much capital on their balance sheets?

Our research shows that the current level of capital requirements does not constrain lending. Sometimes there is a perception that we are only pushing for more capital and more rules, but that is not true. European banks are currently well capitalised and capital requirements have remained broadly stable in recent years. The last time that they were raised significantly was in the wake of the financial crisis of 2008 – and with good reason. During the pandemic, by contrast, requirements were temporarily eased.

Our goal is to ensure banks are resilient and stable, so they can continue to fulfil their vital role in the economy by financing businesses and households – not only in good times, but also in bad times.

The EU is aiming for greater autonomy and stronger competitiveness. What role can the financial sector play in achieving that?

The problem is that the single European market is not truly single. And because we still do not have a fully fledged banking union, capital and liquidity remain trapped within national borders. The solution to that fragmentation is integration, not deregulation. That is why we need a genuine single market, a European deposit insurance scheme and a capital markets union.

That last point is a type of simplification that many Member States endorse in words, but at times obstruct in practice. For instance, the planned takeover of Germany’s Commerzbank by Italy’s UniCredit is facing strong political resistance in Berlin.

Without commenting on individual institutions or transactions: if you aim to build a single market, yet at the same time fiercely resist cross-border mergers, you are maintaining the very barriers we should be dismantling as quickly as possible. Only when doing business between Portugal and Finland becomes as routine as banking between Groningen and Zeeland will banks be able scale up – with all the benefits that brings for their competitiveness and for economic growth.

European solutions may in the short term feel like a loss of national sovereignty. But in the medium to long term, they are precisely how we in Europe can continue to shape our own future. We did this a generation ago with the euro, and a decade and a half ago with European banking supervision. Now we need to do the same with the banking union, the single market and the capital markets union.

Europe is under intense pressure from both the east and the west. We must finally complete the task we have been working on for so long. Only then can we generate the growth needed to keep our destiny in our own hands.

What exactly does the ECB mean by simplification?

We are simplifying and speeding up our own processes. Take, for example, our annual supervisory review, which covers all of Europe’s significant banks (currently numbering 111). We assess capital, liquidity, business model and governance. But is it equally useful to examine every risk area for every institution in the same way every year? The answer is no. We no longer scrutinise every risk at every bank each year. If a bank has been assessed in a particular risk area and no significant findings have emerged, the frequency of reviews in that area can be reduced.

For some supervisors, that is unsettling. They are afraid of missing something. But we are changing our supervisory culture and clearly setting priorities.

In practice, how does simplification translate into a lighter regulatory burden?

We have identified nearly a hundred publications containing supervisory expectations and good practices, which we are reviewing one by one. These will be streamlined, shortened, consolidated, made consistent – and a significant number will be retired altogether.

Another example is the approval of securitisations. That used to take an average of three months. We have reduced that to seven days, provided they meet a set of simple, transparent criteria. If they do not meet those criteria, we will take a closer look.

That may not change the world, but it does significantly reduce the regulatory burden for banks. And for us, it frees up resources that we can deploy where they matter most. Our capacity has its limits, so we have to make choices.

That sounds like a fundamental cultural shift – not just for the ECB, but also for national supervisors such as De Nederlandsche Bank (DNB). Are you able to bring everyone on board?

This is a process. I did not wake up one morning thinking: today is the day I will change our culture. Together with the national supervisors, including DNB, we set our supervisory priorities each year. At that point, individual supervisors may object, but they ultimately have to align with them.

Culture is also reflected in the supervisory approach. How do supervisors behave when they arrive at a bank with, say, a publication of good practices in hand? Does that sometimes create the perception that it contains binding requirements? That is an area where we still have work to do. Through training, by leading by example, and by adapting such texts and making it crystal clear that they are not legally binding. Our role must be clearly understood. We need to remain critical of our own tone. We are a supervisor, not a rulemaker.

Supervisors are also dealing with the consequences of simplified regulation. For example, the European Commission wants to raise the threshold for companies required to report on their sustainability performance from 250 to 1,000 employees.

We set out our Opinion on this at the ECB last year. Our core message was: we understand the desire to simplify, but be careful not to go too far. Banks need to manage their climate- and nature-related risks, and to do so they need data from their clients. If legislators require those clients to publish harmonised data, banks can simply retrieve that data from company websites – without additional hassle for their customers.

If you remove that reporting obligation for companies, the need for that data does not disappear for banks. One likely consequence is that banks and insurers will have to burden their clients directly with questionnaires. What is intended as simplification for businesses could therefore actually lead to more bureaucracy instead.