No… The central bankers want to protect and further enrich the big shots in the banking class? I can’t believe it.
I thought banks were paragons of “capitalism.” Right?
But rather than raising interest rates — a scary thought given how major Eurozone economies like Italy and Spain have come to depend on QE to keep servicing their public debt — the ECB plans to reduce competition in the banking sector by weeding out smaller banks. It’s a process that is already well under way, as Nouy explained in her speech:
Since 2008, the number of banks in the euro area has declined by about 20%, to around 5,000. And the number of bank employees has fallen by about 300,000, to 1.9 million. Total assets of the euro area banking sector peaked in 2012 at about 340% of GDP. Since then, they have fallen back to about 280% of GDP.
But this is not about shrinking the size of the banking sector; it’s about shrinking the number of players within it and in the process creating trans-European banking giants. To achieve that goal, all Europe needs are “brave banks” that are willing to conquer new territory:
Cross-border mergers would do more than just help the banking sector to shrink. They would also deepen integration. And this would take us closer to our goal of a truly European banking sector.
Cranking up the consolidation and concentration of Europe’s banking industry was one of the crowning goals of Europe’s banking union, as we warned over three years ago. But so far it’s been a dismal failure, for three main reasons.