De Guindos emphasizes central bank independence, EU financial autonomy

ECB Vice-President Luis de Guindos underscored the critical importance of central bank independence for price stability and lower interest rates. He also called for greater European autonomy in financial security, reducing reliance on external partners.

Independence: The bedrock of monetary policy

De Guindos asserted that central bank independence is paramount for achieving the best outcomes in terms of inflation and interest rates.

He highlighted that an independent central bank is more credible, leading to lower yield curves compared to non-independent counterparts.

While acknowledging the importance of cooperation with the Federal Reserve, he stressed Europe's need to become more autonomous in areas like defense, cloud services, artificial intelligence, and global means of payment.

"We must become more independent, more autonomous," de Guindos stated, reflecting a consensus in Europe that the paradigm has shifted regarding the United States' attitude.

European banks: Capital as a competitive edge

The ECB Vice-President firmly defended the current capital levels of European banks, stating they are correct and not restrictive to economic funding.

He identified the solvency of European banks as a key competitive advantage over other jurisdictions, citing the absence of significant banking accidents in Europe despite recent turmoil elsewhere.

De Guindos confirmed that the ECB closely monitors links between banks and non-banks, recognizing them as a potential source of financial instability.

He reiterated that maintaining strong bank solvency and capital levels is crucial given geopolitical risks and high market valuations, emphasizing that capital is not a constraint on lending today.

Pragmatism meets strategic autonomy

De Guindos firmly reiterates the ECB's commitment to central bank independence and robust financial stability, underpinned by strong bank capital.

His call for greater European autonomy is balanced by a pragmatic view on ongoing international cooperation.

Ultimately, the interview stresses that internal market completion is paramount for strengthening the euro's global standing, more so than external liquidity lines.