The European Commission has put forward a plan to unlock €230 billion in liquid assets held by EU banks. The proposal is part of a broader set of banking reforms aimed at closing the competitiveness gap with US rivals by the first quarter of 2027.
Why the reforms are needed
European lenders have long argued that strict post-crisis rules put them at a disadvantage compared to American banks. The Commission's proposal directly addresses that complaint. It wants to free up capital that banks currently hold as a buffer, allowing them to lend more and invest in growth. The goal is to make EU banks more competitive on the global stage, especially against US institutions that operate under lighter regulations.
What the proposal entails
The €230 billion figure represents liquid assets that banks would be allowed to use more freely. The Commission says the move would boost lending to businesses and households without weakening financial stability. The reforms also include changes to how banks calculate risk, which could lower the amount of capital they need to set aside for certain loans. Regulators would still oversee the process, but the new rules aim to reduce red tape.
Timeline and next steps
The Commission wants the reforms in place by Q1 2027. That's a tight deadline for EU lawmakers and member states, who must approve the plan before it becomes law. The proposal is part of a wider push to modernize the bloc's banking sector, which has lagged behind the US in profitability and market share. The next step is for the European Parliament and the Council of the EU to debate the details. If approved, banks could start tapping the unlocked assets within months.
