A global health and economic crisis such as this requires a coordinated response on an international scale, as is currently happening. In Europe, however, it demands something more: deepening fiscal and monetary integration. The European Central Bank’s response since the start of the pandemic and the establishment of European recovery funds undoubtedly represent a giant step forward in the common European project. <\/p>\n
The significant and decisive monetary action and its transmission by banks will be insufficient if not accompanied by fiscal measures that offset the cost of the crisis, boost demand, and improve expectations. The crisis is of such magnitude and intensity that individual responses, limited to the existing capacity in those countries most affected by the pandemic, are insufficient to confront it. Therefore, a joint fiscal response is key, going beyond solidarity by strengthening integration and confidence in the viability of European integration. The European plan, which includes the European Union’s long-term budget and the Next Generation funds, represents several milestones: a greater economic response, common financing (albeit temporary), a greater joint fiscal stimulus on an international scale, and an investment focus on innovation and sustainability. <\/p>\n
The common European response amounts to more than 17% of the eurozone’s GDP, a percentage higher than the size of fiscal measures adopted in the United States and China. It could not be otherwise given the deep social and economic scars the crisis will leave. <\/p>\n
If the ultimate goal is strong and sustained growth once we have overcome the disease, the priority to achieve it lies in the efficient management of European funds. Governments’ commitment to multiplying their positive effect through reforms that increase productivity, and public-private collaboration will be the pillars in the recovery process. <\/p>\n
Spanish banks, which lead efficiency levels in Europe, are adapting to this demanding scenario in which strategies that enable them to strengthen themselves to continue providing the best service to society take priority. Because a strong economy needs strong banks as they are today. <\/p>\n
And for recovery, banking strength is as fundamental as business strength, which requires a strong investment pace to adapt to changing customer preferences. Therefore, European funds, injected into viable businesses and projects, represent a unique opportunity to modernize our economy and focus it even more on digitalization and sustainability. <\/p>\n
Banks are committed to continuing to collaborate with authorities on the path forward, mobilizing resources and protecting their clients from the effects of the pandemic on activity. Their contribution to ensuring that European funds achieve the success we all expect involves the possibility of advancing them and channeling them following objective and responsible criteria, including co-financing or co-investing in projects. <\/p>\n
Finally, the common European fiscal strategy can serve as a catalyst to finally complete monetary union with the creation of a single capital market and banking union. To drive recovery, it is also necessary for monetary policy to hand over to fiscal policy, which does not necessarily imply more restrictive financial conditions in the future. On the contrary, it involves establishing a strategy for returning to monetary normality adapted to events that prioritizes financial stability to prevent new problems that do not currently exist from arising. <\/p>\n