While the recommendation primarily targets pay-out restrictions on the consolidated level, one tricky issue has
been restrictions on the sub-consolidated level. On the one hand, the recommendation calls for restrictions on the consolidated level, but on the sub-consolidated level if the parent bank is outside the EU. While ideally there would be cooperation on the global
level, this has not happened, so we need to primarily take care of the European financial system. On the other hand, several Central and Eastern European countries have imposed restrictions on subsidiaries of EU cross-border banks for financial stability
concerns. There are strong arguments on either side. On the one hand, regulatory risk-sharing is incomplete in the EU (including within the euro area) and the financial stability mandate of national macro-prudential authorities focuses on local financial systems
and economies. On the other hand, the Single Market principle of free movement capital speaks against imposing restrictions on the subsidiary level. The Recommendation therefore advocates that the relevant authorities enter a dialogue when considering imposing
pay-out restrictions on subsidiaries of EU financial institutions. Compared to the last crisis, there are quite some fora available for this dialogue, including colleges, the Vienna Initiative and the Nordic-Baltic Macroprudential Forum.