And such activities by unregulated non-banks can create pressure for a race-to-the-bottom among more regulated banks, which would also be detrimental consumer security. We therefore need to ensure the right balance between innovation and regulation. The regulatory landscape should not stifle new operators or protect the rents of banks, but it also needs to be consistent and fair.
However, given that the structure of the facility still requires annual rollovers, the borrower’s financing remains uncertain. One of the factors that made the ESM successful is that its loan maturities have very long terms of 10 years or longer, reducing the borrowing country’s burden and uncertainty about the repayment schedule.