The Vice President of the European Central Bank (ECB), Luis de Guindos, stressed this Friday that the institution’s opinion on the temporary tax on banks that is being processed in Spain, published yesterday, “seeks to help” the Government and has recalled which is not binding.
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“Our opinion is about helping governments and people often forget that. It is not binding”, Guindos recalled during his speech at the 11th edition of the ‘Energy Prospectives’ conference, organized by IESE and the Naturgy Foundation, where he also pointed out the polarization of public opinion in Spain.
The former PP minister has stressed that this is something that the ECB has done on previous occasions in the past with other states in the eurozone that planned to introduce taxes on banks. Guindos explained that in the process of producing its opinion, the ECB has incorporated a panel with representatives from many different areas, including economics, monetary policy, supervision or financial stability, in addition to having the collaboration of the national central bank, taking into account opinions previously issued and the specific characteristics of the case.
“Fiscal policy is not our job, but it has potential consequences on the solvency of banks, credit growth and financing conditions,” he added.
In any case, he stressed that the introduction of the tax and its design “will be a democratic decision”, taken by the Spanish Parliament, so the ECB’s angle “is to help”. “They may or may not follow it because it is not binding,” he added.
Guindos, who has participated in a debate together with the Nobel laureate in Economics Christopher Pissarides, has pointed out that governments “should dismantle regulatory barriers” to allow the deployment of renewables, whose expansion “would benefit price stability” in the Eurozone.
He has also insisted that fiscal measures to contain the rise in energy prices “focus on vulnerable groups.” Otherwise, they are launched “for everyone, for the rich, for the poor, and it will not be cheap”, the price signal is eliminated and the energy transition can be hindered, he said.
Guindos has acknowledged that the agency has “underestimated inflation in the last year and a half” and has “made mistakes like everyone else” when assessing the magnitude of this price crisis derived from the energy crisis due to the war in Ukraine.
He stressed that it is essential “not to lose credibility” to avoid a spiral of price and wage increases. As a “personal vision” he has pointed out that there will be “very low growth” in the coming months, with the possibility of a technical recession from this quarter and inflation that in the first half of 2023 will average 6-7%, “extremely high”.
“If we were not able to drain inflation, the outlook for growth would be worse”, due to its eroding effect on the purchasing power of households.