FRANKFURT–The European Central Bank (ECB) does not expect Greece to leave the 17-country eurozone, its Deputy President Vitor Constancio said on Tuesday. “We don’t see that happening. We don’t see that Greece will exit the euro area,” Constancio told reporters at the presentation in Frankfurt of the bank’s twice-yearly Financial Stability Review. For Greece, such a scenario would be a “very, very serious situation” and “we don’t anticipate that will happen,” he insisted, saying that EU leaders and most Greeks wanted Greece to hold on to the single currency. Asked about a recent resurgence of financial turmoil in the euro area, Constancio said the concerns focused for the most part on Italy and Spain and had nothing to do with Greece. Constancio said it would be “very difficult, if not impossible” for the ECB to try and assess what might happen if a country were to abandon the euro, in a publication such as its Financial Stability Review. Furthermore, such an evaluation “would not help market players in their own assessment and the way they view” such a scenario, he argued. Constancio also said he did not share Germany’s reservations about creating a banking union in the euro area to help boost financial stability. Germany believes a banking union can only work if it is preceded by a fiscal union because a banking union would increase risk sharing among the members of the currency bloc. “No, I don’t share that view,” Constancio said. The main elements of a banking union — including a European deposit guarantee scheme and a single cross-border supervisor of the region’s biggest banks — would not involve significant amounts of taxpayer money, he insisted. In the Financial Stability Review, the ECB similarly argued there was a “need… to conceive a banking union as an integral counterpart of monetary union.” And while such an endeavor would “clearly take time to implement and could require legal changes,” the main benefits of such a scheme would be threefold, the ECB wrote.
First of all, it would “strengthen the euro area-wide supervision of the banking sector in order to reinforce financial integration, mitigate macroeconomic imbalances and, therefore, improve the smooth conduct of the single monetary policy,” it said.