Two reform areas have been particularly relevant to the work of the High-level Expert Group; capital adequacy and liquidity requirements (Basel III as implemented in the EU through the CRD IV/CRR) and recovery and resolution (as in the Commission’s proposal).
Ideally, consolidation should go hand-in-hand with greater geographical diversification. This would allow banks to achieve economies of scope and scale from cross-border mergers and acquisitions, thereby also contributing to greater macroeconomic risk-sharing by diversifying country risks. The way forward Looking forward, there are several ways of estimating what could be “realistic”, longer-term ROE targets for banks.