ECB Vice President Vujčić urges deeper European integration to strengthen resilience to geopolitical shocks

In a speech at the Central Bank of Ireland’s Financial System Conference in Dublin, European Central Bank (ECB) Vice President Boris Vujčić called for deeper European integration rather than retreating from global openness to withstand geopolitical shocks. Fragmented markets limit risk sharing across countries, leaving firms more likely to cut investment when shocks hit. Research cited in the speech finds that markets and fiscal transfers absorb around 30% of output shocks in the euro area, compared with around 70% of state-level output shocks in the United States. Reducing internal barriers to goods and services by 2% could, over the long term, offset the projected impact of higher U.S. tariffs on euro area gross domestic product, estimated at around 0.7 percentage points between 2025 and 2027. The financial priorities reiterated the Eurosystem’s April call to complete the banking union and reduce fragmentation while preserving resilience. Banking groups should be able to operate across the euro area as a single jurisdiction, with capital and liquidity moving freely within groups. This requires a European deposit insurance scheme, consistent management of bank failures and more harmonised creditor hierarchies and insolvency rules. For capital markets, harmonising withholding taxes would help savings flow into productive investment across the European Union. Vujčić also stressed the need for European payments infrastructure that remains operational under stress. He presented the digital euro as a means of reducing dependence on providers outside Europe and referred to September’s launch of Pontes as an existing milestone for wholesale digital payments.