Separate banking rules for the euro area and non-euro countries,proposed as part of the European Union's efforts to keep the U.K.in the bloc, were greeted with skepticism by lawmakers from Berlinto Brussels on concerns that they could damage the singlemarket.

A draft EU-U.K. settlement published on Feb. 2 foresees thepossibility of “different sets of union rules” on prudentialrequirements for banks and other measures to bolster financialstability for the bloc's nine non-euro states, including the U.K.,and the euro area. This bifurcation may be necessitated by the needfor “more uniform” rules for the currency bloc, according to thedraft.

“A two-track approach to banking regulation would damage theEuropean Union,” said Lothar Binding, the Social DemocraticParty's lead lawmaker for finance in Germany's lower house ofparliament. “It undermines the attempt to reach a level playingfield within Europe. This approach would create chaos in thefinancial system in Europe, which the EU aims to avoid. It reflectsa tendency toward renationalization.”