Going beyond the de Larosière Doctrine: effectiveness with proportionality

Abstract This paper explores the European Union’s (EU) approach to regulation and supervision in the field of banking following the 2008 Great Financial Crisis (GFC). The GFC exposed significant deficiencies in the EU’s financial regulatory framework, leading to a series of unprecedented reforms. Central to these changes was the de Larosière report, which advocated for a higher degree of harmonisation of regulation and the establishment of new supervisory agencies to enhance oversight and prevent future crises. Referred to by the authors as the “de Larosière Doctrine,” these reforms emphasise cross-border supervision, unified regulatory standards, and macroprudential oversight. The analysis focuses on how the de Larosière Doctrine has reshaped EU banking regulation, fostering trends like regulatory harmonisation, centralised supervision and supervisory convergence. While these developments have increased the resilience of the EU’s financial system, the paper argues that they may also have, in certain instances, resulted in excessive regulation, potentially stifling competition, innovation, and consumer choice. This argument is supported by a comprehensive review of literature and insights from discussions with banking officials, enriched by the authors’ extensive experience in financial regulation. The paper makes a number of proposals for the refinement of the de Larosière Doctrine and is structured in three parts, examining the European Single Rulebook, macroprudential oversight, and centralised supervision, concluding with a collective assessment of the current regulatory landscape.