Round table: "The Future of Europe in a new International Economic Scenario"

30/06/2012! Navacerrada (Madrid), 30.06.12 The round table The Future of Europe in a new International Economic Scenario has taken place during the second day of the Economics course of the 2012 FAES Campus. The speakers invited to this table have been the director of Bruegel think tank, Jean Pisani-Ferry; the director of the Chair in International Finance System of the IE Business School, Fernando Fern?ndez; and the Brussels correspondent of Die Welt, Florian Eder. The round table was chaired by the editor for Europe of The Wall Street Journal, Brian Carney. Jean Pisani-Ferry: If we want liquidity to be trapped within our country, if we don't wish banks having any cross border activities, then we must ask ourselves the sense in having a single currency. The euro brought financial integration. That was the great advantage and, however, the capital now is not flowing from the north to the south of the euro zone and supervisors are demanding the non-flowing of funds. If we don't stop that, we're going to have a fragmented system, smaller banks on the national level and having a single currency will not have any sense. I wonder how many losses are going to emerge. What's been devised with Spain's plan is a sort of agreement where risk is shared, where we can undertake part of the cost without having to make a direct injection of capital; where a certain cost will have to be paid by the Spanish debt and where members are able to pay due to the risk of Spanish insolvency. In this context, negotiating will be hard if we want to achieve something before the end of the year or before the beginning of next year. The question here is to what extent have Eurozone leaders decided to advance with banking union. At the beginning, they wanted the common supervision of all banks, common insurances for all deposits, common authority to solve the crisis and one fiscal platform for all this. In the next days, we'll see its ambition. If it is ambitious, it's going to involve a very important change, and we must be informed of all its details, given their complexity. Fernando Fern?ndez: Creating the structure for a single financial market in Europe is essential, a structure where banks from different countries share the risk. We either do this or we re-nationalise European banking systems and return to our national currencies. La latest European summit has involved a quantum leap in two fields, as there's a clear message that European leaders wish to break the vicious circle of constant financial risk. One of the important risks threatening the European Union was this idea that countries lacking a central bank and which didn't issue their own currency were going to go bankrupt because they wouldn't be able to overcome the debt problem. This has finally been clarified. The figures on the crisis are overrated: the Spanish financial system has already spent nearly 15% of GDP through provisions to recapitalise the system. There's no reason to calculate that the final cost of the banking crisis in Spain is going to reach 25% of GDP. Brian Carney: If we wish to keep the euro zone united, we need a sort of European-level fiscal authority. If we wish to have a rescue system, of banking supervision, we need money that is only being lent because there's a government which can control, but the European Union doesn't have its own resources, or at least, not big enough to face these problems, for which what's needed is greater democratic responsibility. We're eluding the main issue here: that a sovereign debt and banks rescue system is going to demand an incredible amount of money which we acknowledge is in the national capital. Florian Eder: What's changed in Europe is that "Merkozy" no longer exists. Germany and France together doubled the economic weight of Italy and France, with regard to GDP, but now the Germans are isolated, Germany has half the economic weight of France, Spain and Italy together. OPENING: Jos? Mar?a Aznar | Mar?a Dolores de Cospedal First day: Ernesto Zedillo | Juan Rosell | Arthur B. Laffer day: New Opportunities to Start a Company in a Globalised World | The Future of Europe in a new International Economic Scenario" Key Issues on the Economic Crisis: Is This a Global Crisis? of the 2012 FAES Campus