The banking union is a great leap forward, but we need to move forward furthering European integration

BBVA Executive Director José Manuel González-Páramo, who was a member of the ECB Executive Committee and Governing Council from 2004 to 2012, said that five years ago, he did not think it would be possible for this institution to become the sole supervisor of all Eurozone banks in 2016.

However, he warned that the banking union is not yet complete.  European authorities still need to set up a European deposit guarantee fund.  He also defended the need for greater political and monetary integration.  In this sense, he feels that the latest proposal included in the ‘Five Presidents Report’ offers ambitious and realistic objectives.

BBVA’s Executive Director recalled that this report hopes to create the previously mentioned European deposit guarantee fund and a public financing mechanism to back the Single Resolution Fund, financed by banks, by 2017.  And prior to 2025, it expects to revise the European treaties to strengthen the EU’s political and fiscal union.One of the ways to make progress is, according to José Manuel González-Páramo, to have one Europe with two integration levels. Eurozone countries – more integrated - could accelerate their political and fiscal union while other countries could move forward more slowly.  He is also convinced that the EU’s legal and institutional architecture needs to be strengthened in order to build a more united Europe that can withstand future crises.

He also made reference to the Spanish economy’s growth rate, which remains high and well above the euro zone.  BBVA Research estimates show that the GDP will grow 2.7% in 2016 and 2017. He also made reference to the impact of political uncertainty on Spain’s economy, stressing that the absence of a government could be delaying public and private investment decisions.BBVA Research estimates that, without political uncertainty, Spanish growth rate could be seven to eight tenths higher than the current one.

José Manuel González-Páramo was joined in the debate by Ed Balls, Professor at Harvard University Kennedy School and King’s College in London; Marek Belka, President of the National Bank of Poland; and Daniela Schwarzer, Senior Director for Research at the German Marshall Fund.  Ambassador Kristen Silverberg, Managing Director of IIF moderated the panel.