Escrivá: Banking union, digital euro crucial for EU growth

Bank of Spain Governor José Luis Escrivá highlighted a significant turnaround in Spanish productivity since 2013, following negative growth from the start of the monetary union until that year.

This shift has corrected approximately one-third of the accumulated productivity gap, driven primarily by improved capital and labor allocation among firms.

The annual report, presented yesterday, details how unsustainable bank credit growth with low origination quality previously led to inefficient resource allocation.

Post-financial crisis, Spanish companies, particularly SMEs and higher-risk firms, have substantially reduced debt and increased equity.

Credit is now more effectively channeled towards productive businesses, with a notable improvement in micro-enterprises.

This positive development reflects a profound transformation of the Spanish banking system, including enhanced credit origination processes and a robust prudential framework that has significantly strengthened its resilience and solidity.

Escrivá advocated for simplifying the increasingly complex regulatory framework, emphasizing that this means eliminating overlaps and reducing low value-added burdens, not deregulation.

He proposed streamlining capital buffer architecture, simplifying the resolution framework, and applying proportionality more effectively to avoid unnecessary constraints on banks.

The Governor also addressed the profound digital transformation in payments and financial operations, driven by tokenization and new infrastructures.

He positioned the digital euro as a strategic initiative to ensure central bank money remains a trust anchor in a digital environment, facilitating private innovation and strengthening European financial integration and competitiveness.