Norman Villamin, chief investment officer for Asia and Europe at Royal Bank of Scotland Group Plc’s Coutts & Co. unit, comments on the need for a banking union to precede a fiscal union and creation of euro bonds.
Villamin spoke in an interview in Singapore today.
On banking union:
“There are some big issues they need to address, the most pressing being Spain. That’s why we think what they need to come out with at the EU summit this weekend is a banking union within Europe that involves things like deposit guarantees, new capital inter-bank and a pan-European regulator they’ve already been talking about.”
On fiscal union:
“Banking union is important for a couple of things. One, it addresses the immediate Spain issue and that’s obviously quite pressing. Secondly, we think it is a small step toward this political cooperation that Europeans demonstrate. Basically countries giving up sovereignty over their banks to a pan-European regulator, that’s the first step toward them giving up sovereignty of their fiscal positions to a pan-European budget-setting process.”
On euro bonds:
“Euro bonds are very important. Eventually they’ll get there. But to get there, you have to get to this pan-European fiscal agreement first. Do a banking union first and demonstrate that that can work and that can work well, and then move towards broader cooperation ultimately culminating in a pan-European fiscal agreement. Angela Merkel has said ‘if you’re willing to do that, I’m willing to do euro bonds.’”
On European Redemption Fund:
“There are some interim measures on euro bonds that could be pursued. Something that’s been proposed by some people in Germany. It’s called the ERF. There’s an outside chance that they discuss some of that on Friday when they make their final announcement. That would probably be a positive surprise if they did.”