The main problem is the compliance workload – that is, the work involved in meeting the requirements and demonstrating that they’ve been met. Therefore, the rules could act as an additional handicap for small banks that are already under pressure from many sides. Take the rapid digitalisation of banking, for example, or the lowinterest-rate environment.
In this regard, the smaller financial institutions in Europe are facing much the same challenges as those in Japan. One reaction that we are seeing in the European banking sector is continued consolidation. As supervisors, it can’t be in our interest to overburden smaller institutions with rules that were designed for their larger peers.