Creating a European Union savings union has become a matter of urgency, European Central Bank policymaker and Bundesbank President Joachim Nagel said on Thursday, adding a closer banking union could follow after that.
European policymakers are seeking to foster deeper and more integrated capital markets across the often fragmented 27-member bloc.
As part of that, they are pursuing a “savings and investments union” to try to encourage retail investors to fund the investments in energy, defence and technology European needs to bridge the productivity gap with the United States and China.
Europe has fallen behind the other major global economic powers, posing a threat to its citizens’ living standards.
Given growing competition among economic blocs and tense relations with the United States, where a large portion of European savings has typically been invested, Nagel said there was no time to lose.
“I think the first step, I believe this is of utmost importance, is to establish the savings and investment union, to do much more here. I think this is now of utmost importance,” Nagel told a student conference in Milan.
“And then in the next step, we can do the banking union,” he said.
Speaking at the same conference, UniCredit CEO Andrea Orcel said the EU needed to become more competitive, which he has perviously said would happen if European banks were allowed to grow in size to better compete with U.S. rivals.
Orcel, whose ambitions to take over Commerzbank have stalled due to strong German opposition, complained about the barriers raised by European governments against the bank’s consolidation efforts.
Nagel said he shared Orcel’s view about the need for Europe to become more competitive, and reiterated his support for a banking union.
But he said he thought the banking union was first of all about more uniform rules across different markets, with countries adopting a neighbour’s best practice standards wherever necessary, and then consolidation could follow.
(Reporting by Valentina Za)
