Sleijpen urges European unity and central bank resilience

Sleijpen noted that the post-war world order, built on cooperation and free trade, is rapidly disappearing, replaced by major powers pursuing self-interest and weaponizing access to critical resources.

This fragmentation creates more uncertainty and risk, particularly for small, open economies like the Netherlands.

To adapt, Europe must strengthen its resilience by reducing dependence on foreign suppliers for critical infrastructure, such as digital services, energy, and defense.

This involves building internal capacity and forging new partnerships, like free trade agreements with India and Mercosur, to diversify dependencies.

Beyond resilience, Europe must boost its growth potential, which has lagged behind the US and China over the past two decades.

Deepening the European single market by removing remaining barriers to goods, services, people, and capital is crucial, as an ECB analysis suggests these barriers are equivalent to tariffs of almost 70% for goods and 100% for services.

Integrating capital markets is also essential to provide risk capital for innovation and growth, as Europe currently has a patchwork of national rules rather than a deep, liquid market like the US.

An IMF study indicates that structural reforms and a unified internal market could boost European productivity growth by up to 20%.

Providing monetary and financial stability is a core task for central banks, becoming even more vital in an unstable world.

De Nederlandsche Bank and the European Central Bank work daily to control inflation and ensure the safety and soundness of banks and insurers.

Sleijpen cited preparing the financial sector for large-scale cyberattacks as a top priority, given rising geopolitical tensions and technological advancements like AI.

He referenced a Hong Kong case where deepfake technology was used to defraud a company of $25 million, underscoring the real and evolving threat.

While banks have improved cyber resilience, continuous effort is needed, including preparing for successful attacks through response and recovery protocols, actively tested via ethical hacking.

Banking regulation also demands ongoing effort; while some simplification is warranted due to complexity, deregulation and lowering capital buffers would weaken the system precisely when risks are increasing, which Sleijpen called a "serious mistake.

" He also addressed crypto-assets, noting their highly speculative nature and vulnerability to price fluctuations.

Stablecoins, despite their name, pose risks to the core financial system due to their reserve management and links to the broader crypto ecosystem, with a lack of US regulation being a particular concern given their global and dollar-based nature.

These challenges require significant effort even under normal circumstances, but the changed global landscape necessitates thorough assessments and learning from experiences like that of the National Bank of Ukraine, which has maintained its financial system under unimaginable conditions.