Publication: Working Paper Series No. 151

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“The principle of proportionality as an area of national discretion” by Bart Joosen (Leiden University) was published on 30 August 2023 in the EBI Working Paper Series No. 151.

It has already been discussed in detail in CEBS’s technical advice to the European Commission on options and national discretions of 2008: the principle of proportionality has been an important theme for the application of national discretions by Member States addressing banking supervision rules. With the Europeanisation of the rules for banks and other financial undertakings, but especially with the creation of the Single Rule Book, the wide scope that existed in the past for Member States but also for national competent authorities has been reduced. What now remains is still a significant number of options and discretions that can lead to discretionary decisions, with a series of applications of the principle in supervisory practice aimed primarily at creating tailor-made solutions to address domestic specific circumstances. These tailor-made solutions are mainly found in cases where the objectives intended to be achieved by the application of rules can also be realised in another, often less onerous, way. However, with the increasing centralisation of the supervision of entities in the financial sector, this room for discretion appears to be further restricted, and there is an inherent urge to apply such national discretions restrictively in order not to put pressure on the intended harmonisation of the applicable legal framework, but above all to monitor and promote the level playing field in Europe.

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