Greek banks could see their operations and resilience transformed if European Union leaders complete the long-stalled banking union, two top financial regulators have argued.
Claudia Buch, the chair of the Supervisory Board of the European Central Bank, and Dominique Laboureix, the chair of the Single Resolution Board, outlined their shared agenda in a joint article published after a European Commission announcement regarding banking sector competitiveness.
The two officials warned that although the banking union has achieved substantial milestones, the architecture remains unfinished. National rules still dictate key areas of commercial activity across the euro area despite joint supervisory standards, a division that hampers cross-border services, restricts risk spreading, and prevents European lenders from building the scale needed to compete globally.
To overcome this fragmentation, Buch and Laboureix called for a three-part package: a collective European deposit insurance scheme, smoother transfers of liquidity and capital within cross-border banking groups, and stronger European liquidity mechanisms for institutions placed in resolution.
The push for common deposit insurance
The central priority of the reform proposals is the creation of a single European deposit guarantee system. This mechanism represents the third and final pillar of the banking union, which has remained stalled among member governments for more than a decade.
According to the two officials, establishing a collective fund would decouple depositor safety from the fiscal health of individual countries. Under current conditions, when a severe crisis strikes, public confidence in deposit protection can be undermined by the vulnerability of the domestic banking sector and the sovereign creditworthiness of the host state.
The European banking union was originally launched in 2012 in the wake of the eurozone sovereign debt crisis, aiming to sever the dangerous feedback loop between struggling commercial banks and indebted national governments. While the Frankfurt-based European Central Bank assumed direct oversight of major eurozone lenders and the Brussels-based Single Resolution Board was established to handle failing institutions, political resistance from northern member states has repeatedly blocked mutualised deposit insurance.
Cross-border capital and resolution liquidity
Alongside deposit protection, the regulators recommended allowing cross-border banking groups to move capital and liquidity freely between parent institutions and their foreign subsidiaries, backed by firm supervisory safeguards.
For Greek banks maintaining operations abroad, the freedom to shift resources could simplify the allocation of cash and capital to markets where demand is greatest. However, Buch and Laboureix stressed that binding protections must guarantee that adequate funds stay available to local subsidiaries that come under financial distress.
The third proposal targets liquidity support for distressed lenders that enter formal resolution. Buch and Laboureix stated that a credible European liquidity arrangement is vital to ensure that a bank can maintain normal operations and meet payment obligations immediately after undergoing recapitalisation. They urged policymakers to establish simpler rules while maintaining international standards and preserving overall institutional resilience.
Market integration and impact on Greek lenders
The proposed reforms hold direct practical implications for Greece, although the officials noted that the actual consequences will depend on the final regulatory texts agreed by member states. A genuinely integrated single market could make it easier for Greek households and businesses to access financial services from lenders across Europe, while introducing more intense competition to the domestic market.
The source noted that enhanced market integration will not automatically generate cheaper loans or better borrowing terms for retail and corporate customers. Greek lenders, which spent years offloading non-performing exposures and repairing capital buffers following the country's sovereign debt crisis, now operate in an environment where European competitiveness increasingly relies on scale and cross-border flexibility.
Buch and Laboureix urged European governments to advance regulatory simplification and financial integration in tandem. For Greek banks, the potential benefit lies in operating within a unified single market supported by robust joint crisis management, though success will rely entirely on whether new operational freedoms are balanced by strict regulatory protections.
