Those objectives have broadly been achieved. EU banks now operate with stronger capital and liquidity positions, and the framework has been tested in successive periods of stress, including the pandemic, the energy shock and recent banking sector volatility. The European Commission has noted that banks were able to absorb these shocks while continuing to support the economy.

The policy focus is now shifting. Attention is increasingly on how the framework operates in practice, especially in light of persistent fragmentation, the application of international standards, and the overall complexity of the regulatory environment.

Fragmentation and complexity

Fragmentation within the single market remains a central issue. Despite a common rulebook, banking activity continues to be organised largely along national lines and cross-border activity remains limited. Cross-border corporate lending in the euro area still represents a relatively small share of total lending, reflecting legal, supervisory and operational constraints.

This topic is also gaining traction at political level. France, Italy and Spain are discussing ideas to facilitate cross-border banking activity and reduce regulatory frictions. These include a voluntary framework for banking groups with significant cross-border operations, allowing for more integrated management of capital and liquidity. The proposals form part of a broader discussion at EU level on how to address structural constraints in the current framework.

At the same time, the complexity of the framework remains a recurring concern. The interaction between prudential, macroprudential and resolution requirements can lead to multiple layers of obligations applying in parallel. Overlaps, inconsistencies and the cumulative effect of successive reforms are frequently highlighted by both regulators and market participants.

Recent work reflects a growing focus on these interactions. In June 2026, the European Banking Authority published a report on the stacking of prudential and resolution requirements, including options to streamline their application.

Basel III and international alignment

A related strand of the debate concerns the EU’s implementation of international standards, in particular Basel III. In June 2026, the European Commission adopted a delegated act introducing targeted and time-limited adjustments to the market risk framework under the Fundamental Review of the Trading Book (FRTB).

These adjustments aim to preserve a level playing field for EU banks, as other major jurisdictions have delayed implementation. The measures are expected to apply from 1 January 2027 for a limited period, currently envisaged until the end of 2029, and remain subject to scrutiny by the European Parliament and the Council.

More broadly, the discussion reflects a balancing act. The EU continues to emphasise its commitment to the Basel framework, while recognising the need to take account of global developments and the specific structure of the European banking sector.

Output floor and supervisory calibration

The output floor is another area of ongoing discussion. Within the EU framework, it acts as a safeguard that limits the extent to which capital requirements can be reduced through internal models compared to standardised approaches.

Different views have emerged on its calibration and application. Some stakeholders highlight the impact of regulatory burden and fragmentation on banks’ ability to support investment. Others emphasise the importance of comparability and the integrity of the Basel framework.

Competitiveness and next phase of reform

These discussions take place against a broader review of the competitiveness of the EU banking sector. The Commission has launched a targeted consultation covering cross-border activity, regulatory complexity and global competitiveness, with a report expected on 15 July 2026.

This process is likely to inform the next phase of EU policy making. Based on current indications, it may lead to a new round of reforms, with legislative proposals emerging from 2027 onwards.

Concluding perspective

The current framework reflects an extensive period of post-crisis reform and is widely seen as having strengthened the resilience of the sector.

The focus is now on how that framework functions in practice. Issues such as market integration, regulatory complexity and international alignment are likely to shape the next phase of EU banking policy.