March 4, 2021

The Bank of Spain pleads for a European deposit guarantee insurance

The governor of the Bank of Spain, Pablo Hernández de Cos, has called this Friday to complete the Banking Union and to launch a European deposit guarantee insurance, "fully mutualised and with a final date of arrival."

"We have to assure depositors and European citizens that their bank deposits up to 100,000 euros are equal insurance, regardless of the entity in which they are deposited and the country in which they live, within the Banking Union," said the governor.

In this regard, he added that if banking supervision and resolution are carried out in a centralized manner, the responsibility for bank deposits must also be centralized.

The governor inaugurated a conference on Friday to mark the tenth anniversary of the FROB, in which he highlighted the role this institution has played in transforming the Spanish financial system, a process that has been "key to facilitating the recovery of the economy" Spanish after the crisis ".

Despite the restructuring and reorganization of Spanish and European banks, the governor believes that the sector still has pending challenges, such as ensuring that the support of the European Single Banking Resolution Fund is sufficient to face the potential challenges it may face. to face.

Another challenge for the sector will be to address the issue of the provision of liquidity in the resolution of an entity.

"It is necessary to ensure that there are sufficient mechanisms for providing liquidity to the resolved entity that makes the tool and the resolution process itself credible," added the governor, for whom the solution could involve the European Central Bank (ECB) as a provider Of funds.

For the governor another of the challenges of the sector is to harmonize the insolvency regimes in Europe.

"If we supervise and resolve banks in Europe in a common way, I think we should also be able to liquidate them in a harmonized manner," added Hernández de Cos.

"It would be a question of having a separate insolvency regime for banks, given their idiosyncratic characteristics and the negative externalities that their slow and inefficient liquidation can generate on other banks, on deposit guarantee funds and on the real economy. of insolvency should be homogeneous in all European countries, "he said.

Finally, the governor has underlined the importance that has in the European banking resolution scheme, mattresses anticrisis (known in slang as MREL) sufficient for entities, and has warned that for some banks this requirement is "a considerable challenge " in the next years.

This challenge, he added, "should lead them to adequate planning and retention of their own resources and the issuance of computable debt such as MREL, as well as to take advantage of the windows of opportunity presented to meet the requirements within the required timeframe."

. (tagsToTranslate) Bank (t) Spain (t) guarantee (t) deposits (t) European

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