On 31 March 2026, the first session of the SAFE-CEPR EFA RPN Web Seminar Series "Financial Regulation in the Era of Fragmentation, AI, and Geopolitics" took place, focusing on the simplification of banking regulation. The series is hosted by the Centre for Economic Policy Research (CEPR) Research Policy Network (RPN) European Financial Architecture, in collaboration with SAFE (Sustainable Architecture for Finance in Europe).
Enrico Perotti (University of Amsterdam and CEPR) presented his view on building bank resilience by reforming Additional Tier 1 (AT1) debt, Martin Oehmke (London School of Economics and Political Science and CEPR) participated as a discussant, and Loriana Pelizzon (SAFE and CEPR) moderated the event.
Since the global financial crisis, banking regulation has expanded significantly, improving financial stability but also making the system more complex, fragmented, and less supportive of EU financial integration. This is particularly evident in EU bank regulation under Basel III.
Current debates on simplifying the regulatory framework while maintaining resilience are driven by the desire for greater financial market integration in the EU and pressure from the US for greater deregulation. AT1 instruments were meant to reduce stress but have proven ineffective. A proposed reform is to raise their conversion trigger and allow supervisors to activate conversion when a bank is still viable but undercapitalised, ensuring timely intervention while protecting investors’ rights.
