This paper examines the possible tensions, trade-offs, and complementarities between prudential regulation and competition in banking. Well-calibrated prudential rules, along with effective competition policy and enforcement, can jointly foster financial resilience, efficiency, and innovation. Focusing on retail deposits and lending, the paper examines how competition and prudential regulations may strike a balance between stability and open and dynamic markets. It highlights considerations in aligning prudential and competition objectives through proportionate, risk-based regulation. It also stresses the need for sustained co-operation between prudential and competition authorities to ensure these core banking markets deliver lasting benefits for consumers and the economy.
