It can also contribute to financial stability. Everyone doing the same thing or providing exactly the same products would increase the risk of “herding behaviour”, which would potentially have undesirable effects for stability. Also, the process of financial market integration should be driven by the markets and not by regulators.
As I see it, excessive harmonisation or even complete standardisation of supervisory rules and practices would go beyond the current reality of market structures in Europe, especially in retail banking. Completely harmonised products in the mortgage lending sector, for instance, would be the wrong approach. In Germany, fixed-rate mortgage loans combined with prepayment penalties are an established practice for which there is a demand.