OeNB Macroprudential Policy Conference – Financial stability in 2030: Maintaining effectiveness while reducing regulatory complexity

Regulatory complexity is becoming a concern and top priority for policymakers and the financial industry, both at the global and European level. The speed of the debate has gained pace very recently as the political pressure to deregulate has increased. In light of this, the Oesterreichische Nationalbank (OeNB) hosted a Macroprudential Policy Conference on May 9, 2019, where policymakers discussed the tradeoff between reducing the complexity of financial regulation and maintaining financial stability. At this one-day conference, high-level representatives from finance, politics and academia shed light on the drivers of complexity and explored ways to address them. In three panel discussions, the speakers drew on national and international experience with macroprudential policy to investigate what the future regulatory framework, one that also includes nonbank financial intermediaries, could and should look like. The main conclusion of the conference was a call for a high-level expert group at the EU level to explore the main sources of regulatory complexity and measures to reduce it. With less distortionary incentives for banks as well as effective macroprudential supervision and reliable resolution frameworks in place, supervisors should be able to put more emphasis on reducing the systemic costs of banks’ market exit. Less emphasis could be put on keeping all banks in business and regulatory complexity could be reduced without jeopardizing financial stability.