Eurogroup finance ministers believe the collapse of U.S.-based Silicon Valley Bank (SVB) will not have a direct impact on Europe’s financial system, but is a signal of the importance of ensuring the stability of the EU banking system amid ongoing uncertainty.
“Since this bank’s presence in the EU is very, very limited, we do not see direct consequences, but we are closely monitoring developments and we take note of the strong reaction of the U.S. authorities,” EU Economy Commissioner Paolo Gentiloni said after the Eurogroup meeting in Brussels.
He noted that the eurozone economy has entered this year in slightly better shape than expected a few months ago, but turmoil in the banking system amid general volatility could arise at any time.
“Uncertainty remains very high,” the European commissioner stressed.
Eurogroup Chairman Pascal Donohue said the SVB collapse, which shook up the U.S. financial system, was one of the topics of discussion among European ministers.
“The problems (in America) arose because of the specific business model of the bank (…) and the picture here in Europe is very different. Our banks are generally in good shape,” Donohue assured.
The Eurogroup’s statement from the meeting notes that the eurozone economy has recovered significantly from the pandemic and has weathered the effects of rising energy prices. Nevertheless, economic growth is expected to “remain modest in 2023 and gradually accelerate in 2024.”
“While uncertainty about the outlook, especially geopolitical and energy factors, remains elevated, the risks to growth appear more balanced than before. This reinforces the need for fiscal policy to remain flexible,” the statement said.
The Eurogroup gave forward-looking guidelines for fiscal policy in the euro zone. Between 2023 and 2024, it should focus on debt sustainability over the medium term as well as sustained improvements in economic growth and addressing the transition to green and digital technologies through investment and reforms.
