Such threats can have direct effects on citizens’ frustration with European institutions and traditional political parties associated with them. Moreover, regulation-driven consolidation has become an imminent risk, fostering concentration at local level and the comeback of too-big-to-fail. Existing regulatory requirements were not thought of as a way to promote consolidation but are currently working in that direction.
Driven by profitability and efficiency concerns, recent calls for the creation of pan-European banks capable of competing with larger institutions outside Europe as a matter of national sovereignty have added pressure on regulators and policymakers to review existing rules. This in turn has implicitly put on the table the return of too-big-to-fail with the ensuing moral hazard, raising further bailout expectations.