Fitschen said that the importance of the European Banking Union must not be underestimated in its ability to achieve sustainable economic success that would reflect progress made on European integration.
It is important for banks to deal with the consequences of past mistakes and to ensure that taxpayers will not bear the brunt of possible future bailouts, Fitschen said, adding that tackling new tasks is equally vital. This should be reflected in the discussions on effective regulation for the financial industry. Banks must be allowed to perform their function of providing capital for the economy, he said.
Fitschen expressed scepticism regarding proposals calling for negative European Central Bank (ECB) interest rates, noting that pressure on banks to lend to economies where economic recovery was fragile would not be productive. Increased lending activity to these countries would be spurred by demand for credit from businesses that offer promising economic prospects, he added. Fitschen acknowledged that current monetary policy served to buy time for important structural changes.
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Reuters further reported that Fitschen had called for the European Central Bank to finalise quickly the details of forthcoming health checks on European banks because the sector faces a big challenge in completing the planned balance sheet exercises. He said many details in the assessments remained undecided. The ECB aims to complete the checks by November 2014, when it takes charge of eurozone banking supervision.
"It would be desirable," Fitschen said in a statement, "if these details were clarified as soon as possible because the comprehensive assessment for banks represents a significant challenge, especially regarding human resources needed."
© Reuters
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