ESBG policy paper looks at how common currency builds strong Europe
BRUSSELS, 12 March 2019
The following is an excerpt from the recently released brochure 'Together for a growing and more integrated europe: Savings and retail banks’ drive to help Europeans prosper'.
European Monetary Union (EMU) has enjoyed overall success. A natural part of European’s daily life, it has helped keep inflation under control, mitigate currency volatilities vis-a-vis other major currencies, and foster EU-trade. The euro has become the visible symbol of open borders and integration within the European Union.
There have been difficulties as well, which have made it evident that political actors again and again have had to reconfirm stability orientation of their policies. The euro provides a sound foundation for growth and wealth in the years to come, but the Eurosystem must adapt to the arising challenges.
At their summit in mid-December 2018, the heads of state and government of the euro area agreed on important decisions on the further development of the European Economic and Monetary Union. The aim of the measures is to make the euro more stable and crisis-proof. To this end, the mechanisms in the EMU shall be strengthened. Very importantly, the European Stability Mechanism (ESM) will be strengthened in order to be able to support Member States effectively and quickly in the event of a crisis. The design of the ESM into a kind of European Monetary Fund is intended to ensure better access of countries to the capital markets, in particular through precautionary credit instruments and through a stronger role for the ESM in the design and implementation of aid programs. It is good that there should be effective and efficient cooperation between the ESM and the European Commission. The decision to establish a ‘common backstop’, a backstop for the Single Resolution Fund through the ESM, is also intended to strengthen financial stability. Together with the so-called, recently adopted banking package, the banking markets should become more crisis-resistant. The reduction of risks is on its way, which is able to contribute greatly to reinforcing EMU.
Europe deserves praise for growing closer together thanks to a common currency that the majority of Member States uses or plans to use. A powerful and stable currency is in every European’s interest, and an integrated and inclusive Europe needs a strong euro. ESBG supports the objective of making the euro more stable and crisis-resistant and supports the goals of the reforms that make the EMU more robust, provided that some core principles are respected. That includes the capacity of savings and retail banks to finance households and SMEs, the principle of proportionality and a diversified banking sector need to be ensured.
To learn more about the latest public policy positions on banking from ESBG, see the brochure
Together for a growing and more integrated europe: Savings and retail banks’ drive to help Europeans prosper
>> Read the booklet | En français
>> Learn more: ESBG position on SME financing