ECB Proposes Simpler Bank Rules to Cut Complexity, Not Capital

The European Central Bank (ECB) is set to propose simplifying bank rules, aiming to reduce complexity rather than lower capital requirements. The move is seen as a more conservative approach compared to the US and UK, which have been more aggressive in deregulating their banking sectors. The ECB plans to merge two capital buffers, the systemic risk buffer (SyRB) and countercyclical capital buffer (CCyB), into a single requirement. The proposal is expected to be presented by ECB Vice-President Luis de Guindos on Thursday and will be sent to the European Commission. The move is aimed at simplifying rules and reducing compliance costs for banks, but it is unlikely to lead to a significant reduction in overall capital requirements. The proposals also suggest lighter rules for small lenders, harmonising the data bank reporting and statistical offices, aiming to lower compliance costs.