France and Germany have urged the European Commission to accelerate a broad overhaul of EU financial rulebooks, warning that overlapping requirements and extensive reporting duties are weighing on the bloc’s competitiveness and increasing compliance costs for banks, insurers and market participants.
In a joint letter to Financial Services Commissioner Maria Luís Albuquerque, the two governments called for a “financial services simplification package” that would go beyond minor legislative adjustments. The letter argues that simplifying both existing and forthcoming rules is necessary to make the single market for financial services work more efficiently while maintaining financial stability.
The initiative lands as Brussels broadens a wider “simplification” agenda across policy areas, with Commission President Ursula von der Leyen telling the European Parliament this month that complex and fragmented frameworks are holding back Europe’s ability to compete with other major economies. She pointed to the continuing fragmentation of Europe’s financial system, including 27 national regimes and hundreds of trading venues, and linked the push for regulatory streamlining to the Commission’s plans for a deeper savings and investment union.
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What Paris and Berlin are asking for
According to the letter reported by Reuters, France and Germany want the Commission to bring forward a comprehensive package designed to reduce duplication, improve coherence between legislative texts, and trim reporting that does not materially improve supervision or market integrity.
Among the concrete suggestions cited are changes to transaction reporting requirements, with a focus on reducing repeated or redundant reports filed across different regimes. The letter also argues for greater reliance on established market practices where this can meet regulatory objectives without forcing additional layers of prescriptive rules.
The two governments further propose repealing unused delegated powers in existing legislation, an approach intended to reduce uncertainty and limit the build-up of technical requirements that may not be deployed in practice. They also propose easing certain reporting obligations, including for low-severity cyber incidents and for smaller banks, where they argue the administrative burden can be disproportionate to the supervisory value.
The push is not limited to capital markets and reporting. Reuters reported that the ministers also intend to submit additional proposals on banking regulation aimed at strengthening the link between the financial system and investment in the real economy, as part of a broader effort to support European modernisation.
A Council and central bank backdrop
Paris and Berlin’s request builds on political signals already emerging from member states. In December 2025, EU finance ministers agreed conclusions emphasising the importance of simplifying financial services regulation to reduce unnecessary complexity and administrative burden, while maintaining core pillars such as prudential resilience, consumer protection and anti-money laundering frameworks.
There has also been movement within the Eurosystem towards simplification in banking rules, though with an emphasis on retaining capital strength. In December 2025, the European Central Bank set out proposals to streamline the EU’s capital buffer structure without lowering overall capital requirements, including consolidating buffers into broader components and adjusting elements of the leverage framework.
A recurring theme in official commentary is the distinction between simplification and deregulation. The European Central Bank’s supervisory arm has argued that simplification can mean a more efficient framework without weakening resilience, while acknowledging that the boundary between the two can be contested in practice.
Competitiveness, reporting load, and market structure
The Franco-German argument centres on the compliance burden created by layered post-crisis regulation, subsequent additions in areas such as digital resilience, and the cumulative growth of reporting obligations. The European Banking Federation has previously called for simplification to be treated as a strategic priority in financial services, arguing that complexity can slow the sector’s capacity to support households and corporate investment.
Von der Leyen has framed the issue partly as one of market structure, with her call for a larger and more integrated capital market intended to reduce frictions that arise from national divergence and fragmented trading and supervisory ecosystems.
For the Commission, the policy challenge is to reduce costs and duplication without reopening sensitive political debates about the strength of post-2008 safeguards. Financial regulation in the EU spans prudential capital requirements, market infrastructure and conduct rules, investor and consumer protection, and a growing set of digital and sustainability-related obligations.
The Commission has already pursued “omnibus” simplification efforts in other areas of regulation, presenting them as a competitiveness measure while maintaining substantive policy objectives. The Franco-German letter seeks a parallel approach for financial services, with a single package that can address cross-cutting burdens rather than a sequence of narrow amendments.
What comes next
Any Commission initiative would still require negotiation among member states and the European Parliament, and would need to reconcile different national priorities, including varying preferences on supervisory centralisation and the balance between bank-based finance and capital markets.
However, with the Commission already publicly committed to a multi-year single market roadmap and a deeper savings and investment union, the Franco-German request increases pressure for early, visible proposals in financial services.
