EU summit sees no banking crisis

0
104

The European banks are stable despite the losses on the stock market, say the heads of state and government. They want to make the economy greener and more resilient. From Brussels Bernd Riegert.

Banks in Frankfurt and elsewhere in Europe are stable and closely monitored, says EU summit

The heads of state and government of the European Union are trying to calm themselves and the markets in Europe. “The banking system in Europe is stable,” said both Chancellor Olaf Scholz and French President Emmanuel Macron, among many others. At their summit meeting in Brussels, they said there was currently no risk that anything similar to what happened in the banking sector in the USA or at Credit Suisse in Switzerland could happen in the euro currency community. “Bank resilience has improved in recent years. This is the result of tough regulation. I am sure that liquidity and resilience are well developed in our banking system,” said Eurogroup chief Irish Finance Minister Paschal Donohue in Brussels. “But we're not getting lax now. That's why the supervisory authorities are watching developments in the euro zone very closely.”

“No need to worry”

Inflation in the EU remains high, at around five percent this year. Therefore, the European Central Bank will probably continue to raise key interest rates, although the speed of the increases could slow down somewhat, indicated the President of the European Central Bank, Christine Lagarde, in the past few days. Lagarde is also attending the European Summit. The ECB also assumes that the collapse of individual banks in the US will not directly affect European banks.

< p>Chancellor Scholz at the summit: Everything under control?

However, this Friday the Deutsche Bank share price in Frankfurt fell by 15 percent at times. Investors' concerns are likely to persist. “Deutsche Bank is a very profitable bank. There is no reason to worry,” Chancellor Olaf Scholz countered after the EU summit in Brussels.

Banking union to be completed

The President of the EU Commission, Ursula von der Leyen, said late yesterday evening after the consultations with the heads of state and government that the capital markets union and the banking union within the European Union must be further promoted. Above all, the banking union is still stuck with the joint deposit insurance. Germany is opposed to complete communitization because German banks and savings banks should not bail out investors in other EU countries that have less robust deposit insurance systems. The head of the Eurogroup, Paschal Donohue, also warned that the long-decided banking union should now actually be set up. The same applies to the strengthening of the “resolution fund”, which is intended to collectively resolve banks in the euro zone that are not viable.

Eurogroup boss Donohue (left) and EU Commission President von der Leyen read the latest reports at the EU summit: Everything is safe

The situation in the euro zone is not bad

Overall, however, Irish Finance Minister Paschal Donohue drew a rather positive picture of the situation in the EU. “The euro zone is resilient and we expect economic growth this year,” Donohue said. The employment rate is high, energy prices are falling. Despite the effects of the Russian war of aggression against Ukraine in the EU, there can be no question of a recession. However, according to the head of the Eurogroup, it is necessary for the member states to adjust their fiscal policy, spend less money and take out less credit in order not to fuel inflation. That was the right way after the corona crisis, but now, according to the analysis of the experts in the EU Commission, government spending discipline and savings are more important than new borrowing. In this context, the heads of state and government promised at their summit meeting to seriously tackle the reform of the growth and stability pact, which sets the debt rules. At the moment, the pact that limits new debt to three percent of gross domestic product is still suspended due to the corona crisis.

< p>Von der Leyen: The EU still has “homework” to do when it comes to restructuring the economy

Despite all the difficulties, the economist Jakob Kirkegaard from the think tank “German Marshall Fund” sees the EU on the right economic path. “Compared to the crisis summits we had in the past, where the aim was to prevent fiscal meltdown, we are at a completely different point today. We can help Ukraine because we have the means to do so. We can allow us to think about long-term economic strategies, and I'm pleased that the EU heads of government are doing just that,” Jakob Kirkegaard told DW.

Restructuring of the economy necessary

In fact, the EU heads of state and government welcomed the EU Commission's draft legislation aimed at making the European economy less dependent on raw materials and primary products from China and at bringing the production of computer chips and batteries back to Europe. In addition, the conversion towards a sustainable climate-neutral economy should be promoted more with EU funds. At the French request, this also includes “modern” nuclear technology. Federal Chancellor Olaf Scholz said that these laws are being worked on. Everyone just has to go faster. “We have to be at the forefront of technology,” said Scholz. “This is important for the EU in a world that is constantly growing together.”

Example Chips- Production: The EU wants to bring more of these to Europe

The EU does not rely on subsidies and protectionism, said the President of the EU Commission, Ursula von der Leyen. She announced that a solution had been found in the dispute with the USA over unfair subsidies for manufacturers of electric cars. “The US has now agreed that European automakers should have the same access to the American market and tax benefits as their American competitors. Raw materials that were produced or processed in the EU should be treated in the same way as raw materials from the USA,” shared von der Leyen with. In addition, they want to exchange ideas intensively about the subsidies for the high-tech industry. They want to complement each other and not compete with each other.

“Progress is too slow”

The chief economist at the European Policy Center (EPC) think tank, Fabian Zuleeg, is critical of the results of the EU summit. “Not only do we have to get faster, we also have to get smarter when it comes to our answers,” Fabian Zuleeg told DW in Brussels. The turning point proclaimed by the Federal Chancellor must now also be implemented in politics. That means “that the EU member states have to look at their taboos, their areas where they don't want to move and have to realize that it won't work if everyone insists on their positions.” According to economist Fabian Zuleeg, Germany is not the country that is leading the way.

Chief economist Fabian Zuleeg from the European Policy Centre

The dispute over the combustion engine and efuels with the EU Commission shows that Germany is actually backtracking on some points. “That's not the leadership we need in Europe to make things move faster.” Federal Transport Minister Volker Wissing (FDP) is still struggling with the EU for the promise that vehicles with petrol engines can also be registered after 2035 if they burn fuel generated from electricity.

The association of European industry “business europe ” criticized the approaches of the EU summit as not ambitious enough. Overall, fewer regulations and less complex European bureaucracy are needed, said association president Fredrik Persson in a statement. 'A broader industrial strategy is needed. Public authorities should work together with social partners to address the skills and skilled labor shortages that are really threatening our competitiveness,' warned the representative of European business federations.