Last week Maria Albuquerque was „grilled“ in the European Parliament. The former Portuguese finance minister faced rigorous questioning from EU lawmakers. Expectations for her are high: she is tasked with facilitating the mobilisation of private capital, supporting the green transformation of the economy through financing, and advancing the internal market for banks. At the same time, she is expected to reduce administrative and regulatory burdens for financial institutions and companies. The key question is how she plans to achieve all of this simultaneously.

Albuquerque is known for being determined and decisive. As Finance Secretary from 2011 to 2013, and Finance Minister from 2013 to 2015, she led Portugal through its toughest economic crisis, implementing harsh austerity measures under the Troika bailout program. It’s not surprising, then, that she has presented herself confidently in her written responses before the hearing, asserting her readiness to tackle the challenges ahead.

If confirmed as EU Commissioner, Albuquerque says she will immediately present a plan to make substantial progress towards a „Savings and Investment Union" – the new label for what was previously called "Capital Markets Union.“

„I believe this can be achieved with less regulation than we have seen in recent years“, she said in a written submission. Regarding sustainable finance, she adds: „I will work to improve the overall applicability of the legal framework, reduce administrative burdens for companies, streamline the framework to make it more accessible for a broader range of users, including small and medium-sized enterprises – without undermining the core objectives of sustainable finance or leading to greenwashing.“

This is a bold statement that even some of her Christian Democratic allies consider highly ambitious. „I'm curious to see how she plans to achieve that“, commented one EU lawmaker.

Although Albuquerque remained somewhat cautious in her written responses, mentioning that she will first await study results and consult with all stakeholders, the chances of her being confirmed by the EU Parliament are very good. Some lawmakers may criticise her close ties to the financial markets, due to her roles at Arrow Global and Morgan Stanley. However, others will see these experiences as an asset, emphasising her professional expertise.

Interestingly, ahead of her hearing, not only EU lawmakers shared demands and expectations for the nominee, but also national governments. A letter from the finance ministries of Germany, France, and Italy, addressed to the Director General for Financial Market Regulation John Berrigan, is currently circulating in Brussels. Though directed at Berrigan, it is essentially aimed at Albuquerque’s future role.

The finance ministries argue that, given the many recent regulatory requirements that are still in the process of being implemented, the EU should „temporarily refrain from new, more comprehensive legislative initiatives in this area“ in the short and medium term. This explicit call for a regulatory pause, especially concerning larger legislative packages, is noteworthy since traditionally, a newly formed EU Commission seeks to make legislative strides early on.

The letter also requests that EU lawmakers ensure that delegated acts, implementing measures, and regulatory technical standards from the European Banking Authority (EBA) be „proportionate and risk-sensitive.“ This reflects dissatisfaction with the EBA’s tendency to go beyond what was originally intended at the legislative level, a view shared by both governments and many market players.

Furthermore, the three national governments urge a significant simplification of regulatory requirements for financial market participants. They call for the „simplification“ of banking supervision and macroprudential frameworks with the ultimate goal of reducing the administrative burdens on the financial industry and achieving more flexibility in regulation.

EU Commission President Ursula von der Leyen is in agreement, having tasked Albuquerque and other EU commissioners in their „Mission Letters“ with contributing to reducing reporting obligations by at least 25%, and by at least 35% for small and medium-sized enterprises. She is also instructed to organize at least two implementation dialogues per year with stakeholders, to align the implementation process with practical experiences on the ground. Additionally, Albuquerque is expected to subject the „EU Acquis" – the body of existing regulations and directives – to a "stress test“ and propose measures to eliminate overlaps and contradictions in the legislative framework.

The ambitiousness of all these requirements becomes clear when looking at the current state of affairs. First of all, banks, stock exchanges, funds, and other financial service providers still have to adapt to a great deal of regulatory framework from Europe. Even with the regulations already passed in recent years, there is still significant regulatory follow-up work to be done. Currently, the three supervisory authorities at the so-called second level – EBA (banks), ESMA (market infrastructures), and EIOPA (insurance and pension funds) – are said to still need to adopt two hundred delegated acts in order to implement already adopted regulations.