"Why do we need simpler rules? "
“Simplification” dominates today’s European financial‑regulation debate. The new Commission has turned it into a slogan, pledging to strip away layers of complexity, align the regime with the cleaner approaches of other regions, and make the framework easier to navigate. At present Europe resembles a car covered by multiple insurers, each tacking on new clauses over time. The result is a patchwork in which it is unclear what is actually covered or how policyholders are meant to use their coverage. It simply doesn’t work.
How did we get here? Financial regulation traditionally swings like a pendulum—tightening to protect stability, then loosening to spur growth. After the global financial crisis, the pendulum swung decisively toward stability, and may now need to swing back. Europe's pendulum has swung further than others. The Draghi report shows that between 2019 and 2024, the EU issued some 13,000 regulations, mostly concerning financial services, against just 5,500 in the United States. Clearly, we must simplify. But why do we want simpler rules?
First, simplification would sharply cut operating costs for both institutions and regulators. Staff devoted to regulatory and compliance work keeps growing. Cutting bureaucratic requirements that yield little benefit and scrapping unnecessary disclosure obligations would help considerably.
The Draghi report shows that between 2019 and 2024, the EU issued some 13,000 regulations, mostly concerning financial services, against just 5,500 in the United States.
Second, we should simplify rules that overreach. When two requirements from different authorities address the same risk, they clearly overlap and need fixing: it’s like having two insurance policies on one car. Some regulations focus so heavily on financial stability that they handicap European institutions against competitors elsewhere who do similar business. Others are so strict they stifle innovation, blocking new products and services for customers.
In short, simpler regulation should free institutions to focus on what matters: supporting economies and boosting growth. This must still ensure risks are covered and financial stability protected. Yes, uncertainties exist, but we must address them proportionately, and in recent years we may have slowed down our progress with regulatory overreach. Could simplification mean fewer requirements? Possibly. As we identify and eliminate overlaps and inefficiencies, requirements should fall over time. A single, clear car insurance policy would serve everyone better.
Simpler regulation should free institutions to focus on what matters: supporting economies and boosting growth