Mon. Sep 26th, 2022

Madrid, September 19 (EFE).- Luis de Guindos, vice president of the European Central Bank (ECB), defended this Monday that the institution will seek a “balance” between the fight against inflation, which is the “biggest pain” of the European population, and the recession in the eurozone. to avoid

During his speech at the annual meeting of Banco Sabedel’s advisory council, de Guindos argued that inflation affects the entire European population, especially the most vulnerable groups, and for this reason the ECB has priority to fight.

Therefore, “recession will not reduce inflation by itself”, the ECB will continue to raise interest rates, even though the tightening of monetary policy will affect disposable income for consumption and investment, which it can during a recession. A recession you want to avoid.

It’s a “balancing game,” noted De Guindos, who recalled that the ECB only predicted a recession in the euro zone in its worst-case scenario if there was a complete cut in Russian gas supplies.

This does not manifest itself in the Spanish tax on banking

Deteriorating economic conditions will also affect the banking sector, De Guindos warned, as it will first benefit from rising interest rates, then face rising funding costs through deposits and markets.

Two men withdraw money from a bank ATM in Madrid EFE/Emilio Naranjo

Added to this is the fact that economic conditions will affect the solvency of some business sectors, which in turn will affect the financial sector.

Regarding economic policy, the ECB vice president believes that “the first thing is not to make a mistake”, which in his opinion goes through a “selective” monetary policy, focusing on the most vulnerable groups.

De Guindos avoided commenting on the new bank levy in Spain, although he noted that the ECB would issue a non-binding opinion on the matter even if not requested by the government.

In any case, the ECB’s approach to such a tax is “clear”: it will not affect financing costs or lending or the solvency of the financial sector.

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