ECB’s de Guindos: Banking Union and Cap Markets Union Would Have Limited Bank Sector Turbulence

7 June 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Wednesday said that the banking system volatility earlier this year in Europe would have been much less if the EU had made more progress towards banking union and capital markets union.

In a speech at a conference in Brussels on European financial integration , de Guindos called recent bank failures in the US and Switzerland a ‘real-life stress test’ that ‘has provided valuable insights and lessons for the euro area banking sector and for our regulatory and supervisory framework.’

It also underscored the need to move forward with banking union and capital markets union, he said.

‘The financial market turbulence and contagion from the United States and Switzerland would have been far more muted had we been closer to our goals’, he said.

Completing banking union and capital markets union ‘will increase cross-border bank lending and enhance the dynamism of public and private equity markets’, he said. ‘Both are key to enhancing integration and stability in the euro area financial system, and they will also ensure that the funding for the green and digital transitions is available to meet the challenges ahead.’

Still, Europe’s banks had shown themselves resilient, he said, though complacency would be a mistake.