We are all in this together
What is the future of Europe and of the Eurozone? This was the topic of a finance seminar in Berlin, organised by the German Banking Association and Luxembourg for Finance. This event was part of Luxembourg’s three-day state visit to Germany. In a roundtable, Ernst Wilhelm Contzen, President of the Luxembourg Bankers Association (ABBL) asked politicians to stop blaming bankers for this financial crisis. The event kicked off with a dialogue between the Finance ministers from Germany and Luxembourg, Wolfgang Schäuble and Luc Frieden.
The mutual respect both politicians showed to each other was palpable during their dialogue. They both declared that European finance ministers have to speak with one voice when they announce reforms that will be painful in the short-term but inevitable if Europe wants to become more competitive. Luxembourg’s Finance minister Luc Frieden underlined that a strong fiscal policy is needed, but that Europe needs more than that. “We need to support innovation and technology. We have to bring out the best in the 500 million people living in Europe”.
It was striking how both politicians demonstrated their solidarity to get Europe back on track. Germany’s finance Minister Wolfgang Schäuble said that we have to stop bringing a new crisis into the media every other day. “We must not forget what has been achieved in Europe during the last 60 years. We shouldn’t be discouraged by short-term setbacks. The Netherlands have shown after their government resigned/ that you must not rely on extreme right-wing and xenophobic parties. Such a strategy doesn’t pay off, instead it weakens democracy. So don’t vote for such parties”.
“What about a financial transaction tax in Europe?”, the moderator Bernd Wittkowski, deputy editor-in-chief from the German Börsenzeitung asked both finance ministers. Luc Frieden said in a slightly provocative way that it is more complicated than just to ask if one is for or against such a tax. Rather, we should ask ourselves: what is the purpose of such a measure?
“Do we want to collect more money via such a tax or do we want to slow down several financial transactions? If I know that a financial centre like London is against such a tax, I have to ask myself twice what benefit there is for the rest of Europe. But I don’t mind discussing it if this tax is applied in the financial centres of London, New York, Singapore at the same time”.
According to Wolfgang Schäuble, this tax has to be implemented on a global level, but you have to start somewhere. “In Europe we talk a lot about sustainability that is why it makes sense that we set the example. European finance ministers have to speak with one voice in order to gain people’s confidence, because this triggers economic growth. The crisis we are still facing has clearly demonstrated that financial markets had to be saved; they couldn’t have done it on their own. And they need rules they didn’t manage to set by themselves”.
Who is to blame?
This dialogue was followed by a roundtable of representatives from Germany and Luxembourg. Ernst Wilhelm Contzen is President of The Luxembourg Bankers Association and CEO of Deutsche Bank Luxembourg. He agreed with both finance ministers that we need a European governance system. “We cannot put off important decisions such as the nomination of high positions in Europe because we have to wait for the election results in France. I wish that the countries in Europe grew together and organising elections the same day in all European countries could help to reach this goal.”
Dr Carsten Sieling is member of the Bundestag, the German Parliament. Though he is member of the social democrat opposition party SPD, he didn’t come to criticise finance minister Wolfgang Schäuble. He said that he was doing a good job helping Germany play a leadership role in Europe. In this context, he explained why he is in favour of a financial transaction tax. “The retail investor is not harmed by this measure. It targets investors that do a lot of trading with high risk products”.
Wiping away uncertainty
Dr Theodor Weimer is spokesman for the executive board of UniCredit Bank AG. He appreciated the cohesion between the Luxembourgish and the German finance ministers and the willingness they demonstrated to learn from each other. But there was not only praise.” I criticise, however, that not much was said about the future of the common European finance policy. I deplore that right now we don’t have a single European financial market”.
While both bankers agreed that confidence is the most important thing banks have to give back to their clients, Ernst Wilhelm Contzen harshly criticised the attitude of politicians. “Politicians are looking for a tax, no matter what, in order to punish banks, which are regarded as the scapegoats for this financial crisis. Politicians, regulators, banks as well as greedy clients have to be held responsible for this crisis”.
Yves Mersch is Governor of Luxembourg’s Central Bank. He has noticed that during the crisis a renationalisation of the financial markets has taken place, also because of some decisions taken by local regulators. He revealed his remedy to cure the patient called Europe, “The recovery of public finance in all the Member States of the European Union is top priority because fiscal policy is the anchor of confidence”.
Yves Mersch concluded with a solution that makes sense. “We need large banks that are specialised in cross-border banking and that is why we need a European regulator too. These banks are the global players competing with banks from other continents. At the same time, we need smaller banks that can be supervised by a local regulator, but we have to separate both types of financial institutions.” CW
Photo: © 2012 SIP / Charles Caratini, all rights reserved