While speaking at a conference in London, European Central Bank policymaker and Governor of the Bank of Spain Pablo Hernandez de Cos said that the European financial system was still fragile and fragmented due to the “doom-loop” between sovereigns and banks.
Key quotes (via Reuters)
- European financial integration by reinforcing banking union, capital markets union initiatives.
- Europe needs to address current deadlock on third pillar of banking union, European deposit insurance scheme.
- National fiscal buffers may not be enough to accommodate severe common shocks.
- EU still lacks fiscal tools to cushion against asymmetric or large systemic shocks in the euro area.
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