Finance is not football (although sometimes I wish it was, so I could blame the referee when things go wrong). But the need for a level playing field in financial services is just as strong.

Our Nordic banks and insurance companies compete on a fierce global market. Part of that competition stems from the integrated European internal market. And rightly so. European integration has benefitted consumers and companies alike through improved efficiency and product quality, market access, price transparency, and much more. But integration, as well-intended as it is, carry with it certain risks. Those risks have become evident in the aftermath of the financial crisis and they are generated largely by one phenomenon: financial regulation.

Because cross-border integration of financial services requires that the rules are the same for all actors in the market. Companies in one part of the European financial sector should not be able to gain a competitive advantage over companies of the same character in other parts just because the rules are different. The field of competition needs to be flat, and here are two of the main challenges that risk making it into a hill.

The first challenge concerns rule making. As I wrote in a recent blog post, policymakers in Brussels have developed regulation in 400+ areas of financial services, covering the 28 EU Member States and the 3 EEA-EFTA countries. Supervisors in Frankfurt, London and Paris as well as national authorities have already started developing detailed interpretations of these rules. The European Supervisory Authorities have been given the job to ensure that the rules are consistent across the whole internal market. It is a daunting task.

First, all the European rules covering financial services should be well-designed and avoid overlap. Second, national regulators should implement the rules in the same manner in all countries – as independent as possible of local variations and circumstances. This second point depends as well on a third aspect which is correct translation – someone needs to secure that the nitty-gritty details of technical finance rules look the same in Polish, Spanish, Romanian and Icelandic. Fourth, supervisors must work with the rules in the same way across Europe – or we risk creating coherence on paper but differences in practice.

The second challenge relates to the future of the financial sectors as such. Developing a capital markets union in Europe is on top of the agenda of the new EU financial services chief, Jonathan Hill. The aim is to make it easier for small and medium-sized enterprises (SMEs) to get access to capital. Since 2008, bank sector lending to SMEs has dropped almost 40 percent in the euro area. European policymakers now want to find alternative sources of funding, by boosting securitization and crowd-funding and exploring the potential of pension funds and insurance companies as investors, among other things.

One of the main reasons behind the drop in lending is the new rules on stronger capital requirements. This supply-side force is combined with a generally weaker and more insecure economic outlook, contributing to lower demand for credit. When new sources of funding are sought out via regulation, the different providers of funding to the economy need to abide by same rules. Diversification can offer opportunities to reinforce credit issuance, not least the supply of seed and start-up capital in Europe. From a systemic risk perspective, diversification is however only good if all suppliers of credit abide by the same rules. It is also important to remember that commercial banks have a tradition of regional and local presence, which in turn makes quality credit assessments easier and safer through the employees’ contacts and knowledge of the local economic context.

So we should work to make sure that the playing fields – in financial services as well as football – remain level. In the end, this will benefit the whole of society – employees, customers, shareholders and football-fans alike.

Arvid Ahrin, General Secretary

@ahrinNFU