Banco de España
“Common policies against common shocks”. Pablo Hernández de Cos.

Completing the Banking Union

This article written by Pablo Hernández de Cos, Governor of the Banco de España, was published in “The EUROFI Magazine” last 24th of March 2020. 

  • The governor calls to strength “EMU with a comprehensive package of common safety nets, robust joint policy tools, and a reinforced and effective coordination of national policies”. It is also a call to the European solidarity about the need for a common safe asset (Eurobond, Coronabond…?) and to conclude the Banking Union:
    • Need for a common safe asset:A common safe asset would be ideal, providing a neutral source of funding and simultaneously sending a strong signal of unity and goodwill. The world is watching. If not now, when?
    • Need to conclude the Banking Union:The current institutional arrangements of the Banking Union do not provide the required level of credibility. Banking activity transcends national frontiers, but the guarantee on deposits is still borne by Member States.”
  • These concrete actions will contribute to the stability of the European Union in times of covid-19, and they will be necessary to overcome this crisis and future ones. 
  • In the words of the Governor: “the speed and the scale of our response to the crisis and our ability as policymakers to work together will determine the strength of the recovery”.

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