bundesbank President Joachim Nagel appeared open to completing the European Banking Union at the World Economic Forum in Davos. Nagel said this publicly for the first time during the traditional “Frankfurt meets Davos” event.
Nagel said he was aware of the reservations that exist in Germany, but given the changes in the world, it is essential for Europe to advance its internal market through a banking and capital markets union. The Bundesbank President warned Germany and Europe not to sell themselves short in international competition.
The criticism of the completion of the banking union expressed by parts of the German banking sector, especially in the last decade, was largely sparked by the concept of a common European deposit insurance. The Federal Association of German Banks fundamentally supports the concept, while the politically influential associations of Volks- and Raiffeisenbanken and Sparkassen are negative.
A proposal to complete the banking union, made in May by the chairman of the Eurogroup Paschal Donohue, was rejected by the federal government, among others. When asked about the debt brake at the event in Davos, Nagel said that he thinks the debt brake is important, but he also thinks it is good that a debate has started about its specific design. Some time ago, the economists at the German Bundesbank put forward proposals for reforming the debt brake.
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