Vice President of the European Central Bank (ECB), Luis de Guindos expressed the view that making the regional debt permanent rather than writing it off is a better option. Colloquium following the talk at the 28th Trobada d’Economia a S’Agaró. When asked about the debt amnesty agreed upon by the socialists and the ERC, Guindos expressed his “personal” perspective and underlined that “debt amnesty is not very pleasing to the markets.”
The option of converting the debt into permanent debt with very low interest is an option suggested by some experts and welcomed by the markets.
Guindos insisted on the following in his speech that day: interest rates Inflation in the Eurozone will remain high for a long enough period of time, although it is on a downward trend. He assured that monetary policy measures create an impact in an economy. slowdown“not a recession”, but “We cannot claim victory inflation“Because he warned that there could always be factors that would cause the increase in the general level of prices to continue its rise.
Guindos, who followed the ECB’s strategy of cooling down hopes of a future decline in money prices, stated that if interest rates remain high for a long time, inflation will approach the target of increasing the general price level. . Warnings that interest rates will remain high for a long time have been going on for months. The governor of the Bank of Spain had already predicted this last spring, Pablo Hernandez de CosDuring a conference in Barcelona.
In the view of the ECB vice president, increases in the price of money Reflected on credit and marketsBut there is a second stage, which is transfer to the computer. economic activitysome are still pending and are often delayed by 12 to 18 months.
Bank profitability
He also touched upon banks and nevertheless emphasized the following: high profitability This trend was not reflected in the stock markets. He explained that the average profitability of European banks in 2019 was “just over 4 percent and is now over 10 percent.” According to them, investors believe that businesses will have to increase their provisions. increase in cost of capital and therefore high profitability It’s a short-term phenomenon that’s “not very sustainable.”
ECB vice president also mentioned it as a risk “legislative uncertainty”Like banking taxes that some countries, including Spain, have approved. He spoke clearly about the economic situation: “We find ourselves in a recessionIt’s going to be pretty similar in the fourth quarter as a result of inflation. He highlighted positive aspects such as “He also noted that there are risks that growth will be lower than expected.” employment increaseThis is increasing more than the gross domestic product (GDP).
Guindos stated that in addition to the slowdown and low investment levels, there are geopolitical risks and new fiscal rules that will end the four-year “open bar” in the euro zone.
At the opening ceremony of the day organized by the Olaf Palme International Foundation, President of the Spanish Chamber, José Luis BonetHe reminded that the economy is facing a slowdown phase in which consumption will be preserved and investments will be dependent. Whether the business world maintains a “defensive or aggressive” attitude. According to Bonet, tourism will “cover up” the problems that affect companies “down below”.
Bonet stated: education “it’s not going well” and the only thing going well in this area is vocational training (FP). The President of the Spanish Chamber also criticized pension system reformHe assured that this was a complete burden on the companies.