Mr. Mario Nava:

"Regulatory arbitrage" means there are different rules in different places and those rules can be arbitraged. This means that the banks can shop, if one likes, in those rules and choose the place where they are more favourable. In a single market, this creates economic decisions which are based on rules rather than economic grounds and therefore introduces a distortion in the Single Market. It is exactly to avoid the possibility of using different rules in different places that we went towards the single rule book. The sentence the Deputy read comes immediately after a sentence on the creation of the single rule book, which is the capital requirement regulation. The logic of this regulation is exactly to avoid circumstances in which one has different rules in different places for the same activity. This would create an advantage in going to one place rather than another, which would not be compatible with the Single Market.