Herr Scholz, if you are interested in the European banking union, give us the Eurobonds. In Italy, the debate was heated on the State Savings Fund (which, in reality, even with the changes to the treaties under discussion, remains the same as before) and on the streamlining of the mechanisms – already existing – of restructuring the national debt, in the hypothetical default case. Two themes that the reform links to the introduction of European bailouts for banks in crisis. But this game is just a chapter in the much more complex dance around the structures of a banking union, which the German finance minister, Olaf Scholz, reopened in recent weeks.
Rep
Scholz: "No debt risk from the state-saving fund"
from our correspondent TONIA MASTROBUONI
The risk is that Germany, after having long blocked all progress towards a banking union, now aims to carve it out, according to its political and economic convenience. Ignazio Visco, in recent days, chose the discreet occasion of an internal seminar in Via Nazionale to answer Scholz: the tones are soft, the contents much less.
For Italy, the completion of the banking union – in particular with a European insurance that safeguards all deposits up to 100 thousand euros – is a crucial step to ensure a better circulation of liquidity within the Eurozone. In two words, it is a question of reducing the perception of risk that can slow down the flow of foreign capital to Italy. But in the construction sketched by Scholz, the only problems to be solved seem to be only those that the Germans do not have.First, bank suffering. The German minister poses as a precondition for the union that bad debts be reduced below 5 per cent of the total credits granted. But really, Visco asks, are the sufferings – which Italy, in any case, is reducing quickly – the only problem for European banks? Or are there also weaknesses linked, instead, to "illiquid and opaque" investments? The reference is to the impressive mass of derivatives – securities that are often almost only a risky and very volatile bet – that ballast the budgets of many German banks and which are already creating obvious difficulties for giants like Deutsche Bank.
But the most delicate point regards the packages of government bonds in the bank safes: the 400 billion euros in BTPs that underpin the capital of our institutions. Scholz, like many economists, believes that this creates a perverse spiral: any weakening of the national debt (revealed, for example, by a growth in the spread) weakens the banks and their weakening in turn impacts the Treasury. Also public securities must be evaluated, therefore, says Scholz, based on risk, from which today they are formally exempt in the budget calculations.
Banking union, the risk of a spiral of disaster. We need a strong government to avoid the troubles of the past
of MAURIZIO RICCI
The vicious circle exists, but Visco emphasizes that the link is not limited to the packages of the securities that banks own directly. The banks weaken even if the spread grows, because this is reflected in their rating. And, obviously, they weaken if the Treasury goes into crisis, because the whole economy is in crisis. The crucial problem, then, is to reduce the risk.
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Lane: "Doing deficits is not enough, reforms are needed immediately"
from our correspondent TONIA MASTROBUONI
Such as? The road, understand Visco, is a title of community debt: the Eurobond always rejected by the Germans. Scholz, the governor points out, makes continuous references to the American situation and to the related legislation on bank failures, but he never says that in America there are also federal securities that are completely risk-free. For the banks, Visco insists, a "risk-free asset" is a vital necessity to give stability to the balance sheets. If only national securities were available and these, as Scholz wants, were no longer risk-free, the banks would be gradually crushed by the need, in the event of a spread crisis on the markets, to double capital interventions: once to face to the loss of value of the securities and a second one to compensate for the increased risk. The Eurobond would allow, instead, to diversify the risk of the banks and to absorb a possible flight of investors. Now, the ball is in Scholz.
Budgetary discipline and common guarantee on deposits: two cracks open in the German wall
from our correspondent TONIA MASTROBUONI
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Topics:
Eurobarometer
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