The euro became our common currency on January 1, 2002. Its introduction represented a historic milestone, the largest currency change up to that point, with twelve countries involved. And we were all responsible for the success of its implementation: the banks, logistics, and society as a whole. <\/p>\n
European authorities have reiterated in recent days that the euro is a symbol of success, unity, and peace. They have also considered that the single currency has made us stronger, better prepared to face crises such as the pandemic we have not yet overcome. <\/p>\n
Undoubtedly, the two global crises we have experienced over these twenty years have allowed us to advance the euro and bring out the best in it. The greater monetary integration resulting from the 2008 financial crisis and fiscal integration, with the creation of European funds, have increased public confidence in the single currency, identified with the European Union project. <\/p>\n
The euro has provided exchange rate and monetary stability, essential for increasing economic growth capacity, and has been the necessary condition for advancing toward a common market that, by definition, implies total freedom of movement and exchange of goods, services, and factors of production. However, there is still ground to cover to complete the common market. Among the pending issues are deficient worker mobility, still limited fiscal integration, and incomplete banking union. <\/p>\n
The international financial crisis was aggravated in Europe by initial deficiencies in achieving an optimal monetary union. Its impact demonstrated that the initial monetary convergence was insufficient to provide stability to the union. Greater real convergence was lacking, as well as mechanisms to share risks, complete the banking union, and create a single capital market. The financial crisis served as a catalyst to advance on these issues, but not to fully resolve them. Advancing the banking union has required that credit institutions now be subject to a fully regulated and supervised common framework, with the dual objective of protecting consumers and strengthening financial stability. However, it is precisely this second objective that is threatened by existing vulnerabilities, in most cases external to the banks. In this difficult scenario, our institutions face three challenges: digitalization, competition from third parties that are not banks but offer financial services, and the necessary improvement in profitability, still below the cost of capital. <\/p>\n
Ensuring banking stability does not necessarily require more regulation on the sector, which hinders the design of its strategy in an exceptional context, marked by the rapid digitalization demanded by customers and the difficulty of having to operate with negative official 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, only the common deposit guarantee remains to be finalized in order to advance decisively toward efficient and effective consolidation of European banks. <\/p>\n
Financial markets have become one of the main vulnerabilities for global growth. They transmit uncertainties such as trade tensions or the financial weakness of some emerging economies, while amplifying the shift in expectations of economic agents in anticipation of the expected normalization of monetary policy. 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
The health crisis has demonstrated the strength of the banking system, which has contributed to maintaining credit flows to households and businesses at a very difficult time. All parties, banks and authorities, have acted with flexibility and determination to mitigate the impact of the crisis and facilitate a solid foundation for subsequent recovery. And they have done so within the joint European framework. The objective now is to advance decisively in establishing a common market so that the euro continues to be a driver of progress and security for all. <\/p>\n