HispanicBusiness

confidence in the consistency of the adjustments, and over the new boost to growth in a reasonable timeframe. But also because a safer refuge is sought for investments. In other words, not all of it is speculation. That said, it is a good idea to put some distance between the financial markets and the casino-economy, with suitable regulations.

[Cerretelli] Why is it easier in Europe to help the banks than states that are in difficulty?

[Almunia] The former have received at least three times as much aid, despite the fact they have often acted in an equally irresponsible way. Yet German taxpayers do not seem equally indignant when they are called upon to support them.

[Cerretelli] Issuing guarantees, or loans, is not the same thing.

[Almunia] Of course. But credit institutes and countries that have been saved are today supported by both instruments. If we want to solve the crisis, we cannot afford to make states collapse, but nor can we afford to let the financial system collapse. But it is hard to explain to a member of the public why his country must make a loan to another country. Despite 60 years of integration, there is not yet a European political culture of this sort. It is already hard to explain to him why he has to guarantee support for banks in his own country. Let alone telling a Finn that he has to finance the Portuguese, or a German that he has to help the Spanish and the Italians. But there is one good thing in the crisis.

[Cerretelli] What is that?

[Almunia] It forces us to make political decisions that were impossible just 3 or 4 years ago. And it allows us to achieve levels of integration that are higher than pre-crisis levels.

[Cerretelli] The crisis has laid bare serious cultural rifts between northern and southern Europe. In this climate of mutual lack of trust, is the transfer of national sovereignty on public finances feasible?

[Almunia] One hears unjustified criticism everywhere, in the north and in the south. It needs to be explained to people why we are doing what we are doing to solve the euro crisis. And there must be no exaggeration of tensions, which in part derive from crises and tensions within the countries, which encourage the growth of extremist and demagogic forces.

[Cerretelli] Some people say that today the banking crisis in Europe is even more dangerous than the sovereign debt crisis. Do you agree?

[Almunia] There is an unquestionable link between the two. That is why the decisions on the direct recapitalization of banks, and on the reduction of tensions on the debt market, are important. If the banks have problems, they put more pressure on the public finances, which get worse, with the result that the debt loses value on the markets, and this harms the solvency of the finances of the banks which hold sovereign bonds. Now a decision has been made to break that circle.

[Cerretelli] In the plans for European banking union, there is not just sole supervision in the hands of the ECB, there is also a single guarantee on deposits. In a eurozone which is refusing to pool sovereign debt, is it possible to do this with the banking risks?

[Almunia] I believe that we will achieve a common system for guarantees on deposits, at least in the eurozone, and at the same time we will make progress on the pooling of debt. But the system of a common guarantee on deposits must go hand in hand with common banking supervision.

[Cerretelli] And debt?

[Almunia] The gradual pooling must be preceded by a more pronounced fiscal union compared with the recent 6-Pack, 2-Pack, and fiscal compact reforms. What is needed is a high degree of confidence, which is currently lacking, in the ability of the governments to abide by the commitments entered into. When it is present, the European guarantee on sovereign debts will come by itself.

[Cerretelli] The trio of Italy, France, and Spain emerged forcefully at the Brussels summit. Will it have a role in European reconstruction?

[Almunia] The time for duets in Europe is over. The time of the choir has come.