Financial markets have become one of the main vulnerabilities for global growth. They channel other uncertainties, such as trade tensions or the financial weakness of some emerging economies. They also amplify the shift in expectations among economic agents in the face of expected monetary normalization. A few days ago, the President of the ECB called for greater vigilance regarding potential risks and excesses in the markets, distancing this from the strict regulation and demanding supervision that weighs on banks. <\/p>\n
If we look at the evolution of banks during the crisis, the conclusions are that they have more capital, adequate liquidity levels, have carried out a strong balance sheet adjustment, and are generally more resilient. Naturally, one can always ask for more, especially when there is an implicit expectation for banks to act as a barrier to contain potential risks that, although not originating from their activity, threaten the financial stability achieved with such effort. <\/p>\n
Ensuring banking stability does not necessarily have to involve more regulation on the sector, something that hinders the design of its strategy in a context of rapid digitalization demanded by customers and the exceptional nature of having to work with negative interest rates. Completing the banking union would be a significant step toward strengthening depositor confidence and stability, limiting the risk of contagion from financial markets. With single supervision and resolution, the only remaining task would be to finalize the common deposit guarantee, which would move decisively toward an efficient and effective consolidation of European banks. <\/p>\n
Completing the banking union and moving decisively forward with the single capital market would help mitigate many of the threats currently observed in financial markets.<\/p>\n