(Bloomberg) -- German Chancellor Olaf Scholz said that banks in the European Union should be able to move their capital freely throughout the bloc, echoing a demand voiced by many executives in the sector.

“We need better framework conditions for cross-border banks,” Scholz said at a Berlin conference on Tuesday. “They must have full flexibility to deploy their capital and liquidity” within the EU.

The region’s lenders including Deutsche Bank AG often cite the difficulty to move their funds from one EU country to the next as an important impediment to cross-border consolidation. They say that lifting the restrictions would allow them to shift their financial resources to where they earn the most money and thus provide a strong incentive to expand in other countries.

Scholz’s comments follow an effort by a European bank lobby, the European Banking Federation, to declare the industry a “strategic sector.” The lobby is headed by Deutsche Bank Chief Executive Officer Christian Sewing, who also attended the banking conference.

Scholz also said in his speech that there’s a need for greater harmonization of national insolvency law regimes, more common tax standards and joint rules for capital market supervision.

“We are working intensively with the French government on concrete proposals for all of these points,” he said.

Some EU officials have proposed granting more powers to the bloc’s securities watchdog, the European Securities and Markets Authority. The idea is to create a powerful agency modeled on the US Securities & Exchange Commission.

--With assistance from Nicholas Comfort.

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