The Bank of Spain published a speech by Governor José Luis Escrivá in which he argued that Europe needs a stronger, more integrated financial system to support competitiveness and the financing needs of firms, particularly small and medium-sized enterprises (SMEs). He framed the required financial architecture around three pillars: the euro and payments, a solid banking system, and deep, integrated capital markets. On payments, he highlighted Europe’s dependence on non-European card networks, noting that 72% of retail card payments use them, and flagged potential reinforcement of that dependence via new wallet providers and the expansion of dollar-denominated stablecoins. He positioned the digital euro as central-bank-backed legal tender that would complement cash, underpin private payment solutions and help consolidate and protect the Single Euro Payments Area (SEPA), while wholesale infrastructure such as TARGET would need to adapt to tokenisation and distributed ledger technology with interoperability between public and private platforms. On banking, he noted improvements from Basel III and the banking union but called for completing the banking union through a European deposit insurance scheme, facilitating cross-border mergers, and simplifying European rules and reporting (including Level 2 and Level 3) to reduce overlap without weakening solvency or liquidity requirements. On capital markets, he stressed the EU’s heavy reliance on bank intermediation, citing bank loans at 92% of corporate finance, and urged progress on the capital markets union, now reframed as the savings and investment union, including better early-stage financing for innovative firms and a revised securitisation framework to support risk transfer and lending, including to SMEs. He also pointed to recent European Commission legislative packages on the single market and on start-ups and scale-ups, including a proposed “28th Regime” for innovative SMEs, which he said should be processed swiftly, and noted that the Bank of Spain is assessing the Commission’s announced proposal to revise the securitisation framework.
Bank of Spain 2025-07-10
Bank of Spain Governor Escrivá sets out priorities for the digital euro, European deposit insurance and deeper capital markets integration
Bank of Spain Governor José Luis Escrivá stressed the need for a stronger, integrated European financial system to boost competitiveness and support SMEs. He outlined three pillars: the euro and payments, a robust banking system, and deep capital markets. Key points include the digital euro's role in payments, completing the banking union with a European deposit insurance scheme, and advancing the capital markets union to reduce reliance on bank intermediation.