A geographic breakdown reveals distinct strategic approaches. Europe stands out for pursuing a competitiveness-driven strategy which, from a regulatory standpoint, centers on simplifying its frameworks in the digital, sustainability, and financial domains. To succeed in this endeavor, the EU is proposing a raft of packages (known as “omnibus” packages) to streamline existing regulations and ease administrative burdens and compliance requirements in response to overlapping regulatory initiatives. Meanwhile, the United Kingdom has embraced a renewed mandate to promote international competitiveness, attract investment, and support economic growth, adopting an approach increasingly aligned with the United States and more distant from the EU. It is busy leveraging its post-Brexit autonomy to develop a more agile framework, particularly in digital regulation, capital markets, and ESG matters, where it has chosen not to adopt a green taxonomy. Last but not least, the United States is pursuing a banking deregulation strategy. This entails relaxing certain rules with the overriding objective of fostering economic growth and enhancing overall banking sector profitability. Deregulation has also extended to ESG, which has lost priority under the current mandate. In tandem, an initial cryptoasset framework is being developed with a view to supporting the sector’s growth.
In a world where regions are striving to enhance competitiveness, the US regulatory approach seeks to create a more flexible, growth-oriented environment for banking activity, with a focus on technological resilience and recalibrating capital requirements for large banks.
The EU is proposing a raft of packages to streamline existing regulations and ease administrative burdens and compliance requirements
There is concern that such flexibility could provide US banks with a comparative advantage and potentially trigger a “race to the bottom” in prudential standards. This could encourage excessive risk-taking and erode the post-2008 safeguards put in place to protect financial stability. While the European Union is focused on simplification, and the United Kingdom is leveraging its autonomy to design a more agile and less prescriptive ecosystem to attract technological investment, these diverging strategies may generate global regulatory tensions due to differences in the application of international standards.