Governing Council endorses recommendations of High-Level Task Force on Simplification, which include:

reducing the number of elements in the risk-weighted and leverage ratio framework
introducing a materially simpler prudential regime for smaller banks, which expands on the existing EU regime
introducing a European governance mechanism that takes a holistic view of the overall level of capital
finalising the savings and investment union – including completion of the banking union – to foster cross-border integration and allow for more efficient capital markets

The European Central Bank (ECB) today published the recommendations of the Governing Council’s High-Level Task Force on Simplification to simplify the European regulatory, supervisory and reporting framework. These recommendations were endorsed by the Governing Council and will now be presented to the European Commission.
These proposals intend to simplify the framework, while maintaining the resilience of the European banking system and ensuring that microprudential, macroprudential and resolution authorities continue to meet their objectives effectively. European harmonisation and financial integration should be fostered. International cooperation is crucial and all jurisdictions should ensure full, timely and faithful implementation of Basel III.
The Governing Council strongly encourages the completion of banking union and the savings and investment union to reduce national fragmentation and allow for more efficient capital markets.
One of the recommendations is to simplify the design of banks’ capital requirements and buffers, also known as capital stacks[1], via two changes. First, merging the existing layers of capital buffers into just two: a non-releasable buffer and a releasable buffer that authorities can lower in bad times.[2] When merging buffers, it will be important to preserve the authorities’ current powers and competencies. Second, reducing the leverage ratio framework from four elements to two, namely a 3% minimum requirement and a single buffer, which could be set to zero for smaller banks.
To improve the quality of banks’ capital, the Governing Council proposes enhancing the capacity of Additional Tier 1 capital to absorb losses when a bank is operating normally, which would be Basel-compliant and maintain resilience. Alternatively, non-equity elements could be removed from the going-concern capital stack provided that Basel compliance and capital neutrality are not compromised.
The Governing Council proposes significantly increasing proportionality under EU banking rules by expanding the existing small banks regime[3] to include more banks and simplifying their applicable rules in a prudent and harmonised manner.
To simplify the macroprudential framework, the Governing Council recommends automatic reciprocation of macroprudential measures. This ensures all banks active in a country that applies a macroprudential measure will be subject to that measure.
For the framework that applies when banks fail, the Governing Council recommends aligning the resolution requirements that apply to all banks more closely with those that apply to the global systemically important banks.[4] This should be done without reducing the components on banks’ balance sheets which can be used to absorb losses and recapitalise in case they fail, thereby keeping the EU in line with international standards and making the rules more transparent and predictable.
To achieve further harmonisation, the Governing Council recommends shifting EU banking rules from directives to directly applicable regulations.
With regard to supervision, the Governing Council recommends completing the Single Rulebook and harmonising rules on licensing, governance and transactions with related parties, which would reduce complexity. Supervisors should be given greater flexibility, for example, in how often they review banks’ internal models.
The Governing Council proposes simplifying the EU-wide stress test by streamlining its methodology and scope and making its results more useful from a banking system and individual bank perspective. The results of this revised stress test exercise would help improve the coordination between macroprudential and microprudential buffers.
The Governing Council proposes being made responsible for taking a holistic view of overall capital in the banking union and cross-country heterogeneities, which is currently missing. This could be done by expanding the role of the Macroprudential Forum, which already brings together the Governing Council and the Supervisory Board, to improve coordination and consistency across countries when setting micro- and macroprudential instruments.
With regard to reporting, the Governing Council proposes that European authorities share their data more widely with each other, allowing banks to report only once, thereby creating a fully integrated reporting system at the European level for statistical, prudential and resolution purposes. This could be done, ideally, via the Joint Bank Reporting Committee. All reporting requirements could be reviewed every three to five years to ensure they are still needed. Banks and supervisors would focus on the important data, disregarding minor reporting errors by implementing a materiality threshold for data resubmission requests. Consolidating supervisory and disclosure data would further reduce reporting efforts, with public disclosure (Pillar 3 reports) derived from supervisory reporting.
The ECB will present the proposals of today’s report to the European Commission, which is preparing a report on the overall situation of the banking system that is due to be presented in 2026.
The ECB has also published today a report entitled “Streamlining supervision, safeguarding resilience”, which discusses its ongoing agenda to increase the effectiveness, efficiency and risk focus of European banking supervision. The initiatives described in this report constitute the ongoing work by ECB Banking Supervision under the existing legislation. They complement the Governing Council’s recommendations and can be fully implemented independently of these recommendations.
The ECB welcomes the ESRB’s report on the simplification of its tasks published today.
 
 
Compliments of the European Central Bank
 
 

Banking regulations set out two main sets of requirements: going-concern requirements for banks to remain solvent when they are operating normally and gone-concern requirements to absorb losses and recapitalise if the bank fails. Both frameworks include risk-based requirements, which set requirements based on risk-weighted assets, and non-risk-based requirements which, in contrast, set requirements based on non-risk weighted assets. This results in several capital stacks, each of which is classified as either going- or gone-concern, and as either risk-based or non-risk-based. Each of these different stacks consists of different elements, i.e. specific buffers and requirements.
The new non-releasable buffer would result from merging the capital conservation buffer with the global systemically important institutions buffer or the other systemically important institutions buffer, whichever is higher. The new releasable buffer would result from merging the countercyclical capital buffer with the systemic risk buffer. The non-binding Pillar 2 guidance would be kept separate, on top of the releasable buffer.
EU banking rules include various proportionality provisions, including for small and non-complex institutions. These are banks that meet various criteria including having less than €5 billion on their total balance sheet and having limited trading activities.
The EU has two gone-concern frameworks: the minimum requirement for own funds and eligible liabilities (MREL) applicable to all banks and the total loss-absorbing capacity (TLAC) applicable to global systemically important banks.
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The Commission welcomes today’s decision by EU Member States to introduce a €3 customs duty per item on e-commerce parcels valued below €150, starting in July 2026. The new duty will help protect the competitiveness of European businesses by levelling the playing field between e-commerce and traditional retail.  

Given the rapid increase in e-commerce goods being imported into the EU, the Commission and Member States have together acknowledged the need for an urgent solution, which will bridge the gap until the setting up of the EU Customs Data Hub in 2028, as part of the EU customs reform.  

The Council and the Commission are working to enable the implementation of this temporary measure, through appropriate legal amendments and by ensuring a well-functioning IT framework.  

The permanent customs duty regime will apply once the EU Customs Data Hub is established. The EU Customs Data Hub will fully integrate new customs data related to e-commerce, providing customs services with a complete picture of goods entering or exiting the EU.  

The temporary customs duty of €3 per item will apply to parcels sent directly to consumers from third countries. This measure is separate from the ongoing negotiation of an EU handling fee on e-commerce parcels.While the customs duty eliminates a competitive advantage that the e–commerce operators currently enjoy, the handling fee is meant to compensate for the increasing costs that customs authorities incur for supervising the very significant flow of parcels.

Protecting EU business from the e-commerce boom

The new customs rules for e-commerce, proposed in the Commission‘s customs reform, will reinforce the EU customs union and better equip customs authorities toprotect theEU retail trade and its workers, as well as EU consumers. Theyare vital to create a level playing field for our EU businesses against growing competition from online platforms abroad. 

Background

Today, parcels valued below €150 that are sent from a third country directly to a consumer in the EU are exempt from customs duties. The Commission proposed the removal of this exemption in May 2023 as part of the customs reform.

The initialproposal for the removal foresaw application as from mid-2028. The Council adopted the removal of the exemption on 13th of November 2025, and called for an earlier application of the measure already in 2026.

Inaddition, in February 2025 in its communication on e-commerce, the Commission introduced the idea of a Union handling fee on goods imported directly to consumers. It was introduced in the customs reform proposal by the Council in its negotiating mandate in June 2025.The handling fee is meant to compensate for the increasing costs for customs authorities of ensuring the release of those goods for free circulation.

According to the Council mandate, the handling fee should enter into force in November 2026. The content and date are currently under negotiation between the Council and the European Parliament in the context of the ongoing customs reform proposal trilogues.
 

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The Council’s presidency and the European Parliament’s representatives reached today a provisional political agreement on the revision of the foreign direct investment (FDI) screening regulation. The updated framework aims to strengthen the EU’s ability to identify, assess and address risks posed by certain foreign investments, while preserving the openness to global trade and investment.
The revised regulation builds on the functioning of the current FDI screening framework, which is key to safeguarding public order and security across the EU. The agreement strengthens the current system, mandating screening mechanisms with a common minimum scope to be carried out by all Member States, and foreign investments through EU subsidiaries covered as well.
The agreement also increases consistency across national mechanisms, reducing administrative burden for investors, and ensuring that the potential cross-border security implications of foreign investments will be screened.
 
“Today’s agreement strengthens the EU’s capacity to protect its security and public order, while ensuring Europe remains an attractive destination for investors. We achieved a balanced and proportionate framework, focused on the most sensitive technologies and infrastructures, respectful of national prerogatives and efficient for authorities and businesses alike.”
-Morten Bødskov, Denmark’s minister for industry, business and financial affairs
Main elements of the agreement
A common minimum scope of screenings
To ensure a higher degree of harmonisation across the EU, the co-legislators agreed that all member states would establish screening mechanisms covering a targeted and clearly defined set of sensitive areas where they must screen foreign investments. The minimum scope includes:

dual-use items and military equipment
hyper-critical technologies, such as artificial intelligence (aligned with the EU AI Act definitions and focused on general-purpose AI with relevance to space or defence), quantum technologies and semiconductors
critical raw materials
critical entities in energy, transport and digital infrastructure, based on a risk-based assessment by the member state where the EU target is established
electoral infrastructures (e.g. voter databases, voting systems, electoral management systems)
A limited list of financial system entities, narrowed to include only central counterparties, central securities depositories, operators of regulated markets, operators of payment systems (excluding central banks) and systemically important institutions.

A strengthened but proportionate cooperation and accountability mechanism
The agreement confirms that screening decisions remain the exclusive responsibility of the member statein which the investment is being made. Member states retain full discretion in deciding whether to authorise, condition or prohibit an investment. The final text preserved this principle while improving transparency and coordination among national authorities and the Commission.
In cases where comments from other member states or an opinion from the Commission have been issued, the screening member state will explain how these were considered, including reasons for any disagreement, without prejudice to sensitive national security considerations. According to the agreement, the Commission may assist the host member state in gathering information.
Streamlining processes and interoperability
The agreement also clarified and streamlined several operational aspects of the framework, including:

a new shared database to prevent circumvention and make exchange of relevant experience easier between authorities
an optional single portal for the electronic filing of foreign investments, to be set up if at least nine member states request it
clarification of risk factors for assessing foreign investments.

Next steps
The provisional agreement will now be endorsed by the Council and the Parliament before being formally adopted. The new rules will start applying 18 months after the entry into force of the regulation.
Background
The current FDI screening regulation has been in force since October 2020 and created, for the first time, an EU-wide framework enabling member states and the Commission to cooperate on the screening of foreign direct investments likely to affect security or public order.
Since its introduction, the number of member states with a national screening mechanism has grown significantly. However, divergences in scope, thresholds, timelines and procedures persist, creating uncertainty for investors and potential risks for the internal market. Moreover, evolving geopolitical and technological challenges, including threats to critical infrastructure, supply chain dependencies and the rapid development of dual-use technologies, highlighted the need to update the EU’s approach.
The revision of the regulation was one of the initiatives announced in the Commission’s 2024 package on strengthening the EU’s economic security.
 
 
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