Among other things, it would limit regulatory arbitrage, help remove national bias in supervision, and reduce the phenomenon of “regulatory capture” by powerful cross-border banks, while at the same time reducing compliance costs for cross-border banks and enhancing the functioning of the single market for financial services. The planned European banking union would also benefit the economies of Central and Eastern Europe.
It would work against the fragmentation of the European financial markets along national lines and – by enhancing the financial resilience of the euro area – it would reduce the risks of negative spill-over effects to the CEE banking systems. In conclusion The recovery of the CEE economies remains fragile.