The countries in the euro area warn about financial risks and call for the acceleration of the Banking Union.

Brussels, November 14 - The President of the Eurogroup, Paschal Donohoe, warned that political pressures against regulation and global fragmentation threaten the financial stability built over the last decade in the euro area. In a speech delivered at the ECB Forum on Banking Supervision, Donohoe stated that Europe must accelerate the completion of the Banking Union and quickly advance in creating deeper and more competitive capital markets to protect the resilience of the financial sector in an unstable geopolitical climate.

The Eurogroup leader described the current economic context as "a world where disorder is becoming the status quo," marked by geopolitical tensions and economic fragmentation, which can weaken international cooperation and regulatory discipline. Donohoe emphasized that increasingly present anti-regulatory voices in Europe risk eroding the progress made after the financial crisis and the sovereign debt crisis. He insisted that the independence of supervisory authorities, including the ECB and the Single Supervisory Mechanism (SSM), remains "fundamental" for protecting financial stability.

In his speech, Donohoe reminded the essential role of regulatory efforts after 2008. Before the crisis, European banks were "under-capitalized and under-regulated," and the system was forced to face major bailouts, rising unemployment, and a sovereign debt crisis that affected several member states. These episodes led to a loss of trust in financial institutions, trust that, according to Donohoe, "has been hard-won back."

To avoid an erosion of financial stability, Donohoe called for "more global cooperation, not less," warning that the lack of common standards can lead to regulatory arbitrage, systemic risks, and a "race to the bottom" in banking supervision. At the same time, he advocated for simplifying and streamlining existing rules, as long as they do not stifle innovation and competitiveness in the banking sector in the face of digital, demographic, and green transition challenges.

Completing the Banking Union and accelerating the Capital Markets Union represents, in Donohoe's vision, the necessary steps to build a truly European banking system. He urged member states to show political courage: "We need to be bolder in decision-making to move forward. It is time to throw the hat over the wall and find our way forward together," said Donohoe, invoking the metaphor of Irish author Frank O'Connor to emphasize the need for decisive action.

In conclusion, the President of the Eurogroup insisted that Europe does not need "more or less regulation, but better regulation." He emphasized that, in the current context, financial stability is a "global public good," and maintaining it depends on Europe's ability to strengthen supervision, support innovation, and continue the financial integration of the euro area.

https://2eu.brussels/articol/stiri/statele-din-zona-euro-avertizeaza-asupra-riscurilor-financiare-si-cer-accelerarea-uniunii-bancare