We are experiencing major changes on a global scale, and all changes bring about uncertainty. Navigating through these changes is always complex and often requires the implementation of unorthodox measures, but this should not divert our attention from our objectives, and from getting back on course as soon as possible.
Never before have we seen an interest rate scenario like the present. Never before has there been such a long period of low, even negative, rates on both sides of the Atlantic. The heads of the world's most influential central banks have pumped huge amounts of money into economies to save them from a new recession. The period of heterodox monetary measures has been extraordinarily long and robust. The United States seems to have started this year on the path to higher money prices. Even in the Old Continent, this tipping point is starting to emerge.
Economies may have needed such assistance from central banks at a particular point in time, but it should not be forgotten that excess liquidity in the market can also cause imbalances. Although the Chairman of the ECB endeavours to remind us in each of his appearances that his primary objective is to control inflation, we should not ignore the collateral effects of his expansionary measures. Excess liquidity in the market may be behind the sharp fall in margins in the retail financial business or periods of volatility in equity markets. But this is not the only reason to begin reflecting on the European Central Bank's interest rate increase process. Other groups could benefit, such as savers and pensioners who rely heavily on the return on accumulated savings. For this reason, the signs of economic recovery (in 2016 Spain grew at a rate of over 3%) and the upturn in inflation make it necessary for the European Central Bank to return to monetary orthodoxy as soon as possible.
On the other hand, it is now more necessary than ever to complete the European Banking Union process. The project emerged in 2012 with the ambition of creating a single European banking legislation and supervision. However, the crisis has not allowed sufficient progress to be made and we have failed to reap the benefits that would be derived from its strengthening. The main benefit: the severing of the correlation between bank risk and sovereign risk.
The uncertainty unleashed by Brexit or the apparent rise of Eurosceptic forces should not hinder the completion of this great historic process of European integration. All Member States should show in 2017 their commitment to finish what has been started. Following the success of the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM), the focus should now turn to the European Deposit Guarantee Scheme to ensure common protection for all European depositors. Completing this third pillar, and thus achieving the Banking Union, must be one of the European Commission's priorities. The support of all (regulators, supervisors and industry) is needed to restore this project.
