By David Barwick – FRANKFURT (Econostream) – Former European Central Bank Governing Council member Mário Centeno said Wednesday that Europe needed deeper financial integration, less mutual suspicion and a central fiscal capacity for the Eurozone.
Speaking at AFME’s European Financial Integration Conference 2026 in Frankfurt, Centeno said Europe had to keep reducing risks while also moving beyond a sterile debate between risk reduction and risk sharing.
“We need to integrate more — that’s for me a no-brainer — and to do that we need to reduce risk and this sense of moral hazard that we always fear in Europe,” he said.
Europe had to continue lowering risks in order to create trust across the bloc, Centeno said. But the deeper issue was how to manage risks jointly, he said.
“We need to go from this debate, that is still going on, and it’s certainly an important debate … of reducing versus sharing risk to managing risk,” he said.
Centeno, who was Portuguese finance minister and Eurogroup president during part of former ECB President Mario Draghi’s term, said Draghi’s most repeated message had not been the famous pledge to preserve the euro at all costs.
“The sentence he repeated the most was not ‘we will do whatever it takes,’” Centeno said. “It was ‘monetary policy cannot be the only game in town.’”
The coordinated European response to the Covid crisis showed that authorities could act together when needed, Centeno said.
“For the first time, Europe gives a coherent stabilizing response to a crisis,” he said.
The same approach now had to be carried into the political sphere more effectively, he said.
Centeno said Europe was a source of global stability at a time of volatility elsewhere.
“It [current bond market volatility] is really a non-stabilizer,” he said. “China, the same thing. The UK with Brexit … that’s not going on in Europe. Europe is the biggest supplier of stability in the world. Of course, that comes at a cost.”
The euro was still young as an international currency, Centeno said.
“When I have to explain the euro to non-Europeans, I like always to start with a word of caution, saying that the euro, in terms of a currency, is still a toddler,” he said. “We are still in the initial stages.”
Europe should neither be complacent nor overly anxious about the euro’s development, Centeno said.
Centeno said the Eurozone "badly" needed a central fiscal capacity and criticized European policymaking as often too granular and diffuse.
“We need again not to spread our efforts,” he said. “Every time we decide something in Brussels, that goes into the most granular sort of unit.”
Centeno also urged Europeans to reduce the moral hazard concerns that often hinder integration.
Quoting from Elvis Presley’s song, Centeno said Europe too often suffered from “suspicious minds” when discussing common tools and shared risks.
"We cannot trust the direction of policy in the US," he said, calling it a "moving target." That presented an opportunity for Europe to increase its global standing, he said.
In other comments, Centeno called into question the sustainability of public finances in the US, saying, “This trajectory is not sustainable.”
