European nations push for tech independence and banking integration amid US reliance concerns

France, Italy, and Spain have proposed new rules to integrate the EU's fragmented banking sector, suggesting a voluntary regime for cross-border groups. The plan addresses market divisions that, according to the European Central Bank, constrain €230 billion in liquid assets. The proposal serves as input for a European Commission report due July 15, with a legislative reform planned for 2027 as part of the EU's broader competitiveness agenda.

France-Italy-Spain banking integration proposal

• ▪France, Italy, and Spain have jointly proposed new rules to ease cross-border banking operations and reduce red tape in the EU
• ▪The joint proposal was submitted as input to the European Commission
• ▪The proposal suggests creating a new voluntary, ad-hoc regime for EU banking groups with significant cross-border activities

EU banking market fragmentation

• ▪A document from France, Italy, and Spain states that Europe's banking market remains structurally fragmented along national lines, despite a decade of the Banking Union
• ▪Banking fragmentation in the EU weakens competitiveness, raises compliance costs, and limits access to products and services

Cross-border liquidity constraints

• ▪The proposed new banking regime aims to improve the predictability and usability of capital and liquidity buffers
• ▪The European Central Bank estimates that the lack of cross-border liquidity waivers constrains the transfer of around €230 billion in high-quality liquid assets

European Commission competitiveness agenda

• ▪The European Commission is expected to publish a report on the competitiveness of the banking sector on July 15
• ▪The European Commission plans a legislative proposal for reforming the European banking sector in 2027
• ▪European Commission President Ursula von der Leyen has made competitiveness a central part of the EU's agenda