Banking turmoil continues
Scholz: “There is no reason to worry”
03/24/2023, 16:04
The unrest in the banking market is now also gripping the German industry leader. Chancellor Scholz tries to appease. Deutsche Bank is newly organized and a very profitable bank. France’s head of state Macron blames speculators for the downturn on the stock exchanges.
Chancellor Olaf Scholz has expressed his confidence in the European banking system and in Deutsche Bank. “There is no reason to worry about anything,” he said at the end of the EU summit in Brussels, alluding to the institute’s share price, which collapsed at times. “Deutsche Bank has fundamentally modernized and reorganized its business model and is a very profitable bank.” French President Emmanuel Macron blamed “speculators” for the recent slide in bank values on the stock exchanges. The European banking system is stable and robust, said the SPD politician.
Deutsche Bank’s share price had previously come under pressure. Last weekend, after turbulence on the markets, the Swiss bank Credit Suisse was taken over by its competitor UBS. The Swiss National Bank also provided CHF 100 billion in liquidity support for both banks.
Scholz and Macron thus confirmed the assessment of the head of the European Central Bank (ECB), Christine Lagarde. “The banking sector in the euro area is resilient, it has solid capital and liquidity backing,” she told heads of state and government in Brussels, according to an EU official.
“The banking system is stable in Europe”
Scholz praised the European reforms since the 2008/2009 financial crisis. It was worth it that “very strict rules” were issued in recent years. “The banking system is stable in Europe.” The European Union and the Eurozone had supervisory structures that would have enforced strict rules. “This has now also proven its worth. This puts us all in a position to say that European banking supervision and the financial system are robust and stable and that we have resilient capitalization in European banks – thanks to the work of recent years,” said Scholz .
When asked whether further interest rate hikes by the ECB were justified in view of the turbulence on the financial markets, Scholz said he had to praise the actions of ECB President Agarde and others. Very correct decisions have been made in Europe for many years with regard to banking stability. The decisions were stricter and clearer than in many other parts of the world.
It is a common task to fight inflation. “Progress has been made there. Of course we want price increases to go down. That’s something that has to play a role in the independent decision-making world of the European Central Bank, but also in the policies that we make,” explained Scholz.
