Ecb’s View on the Proposed Spanish Tax Is Largely Influenced by Banks’ Stability

Senior ECB central bankers stated that the institution may render a non-binding view on the planned levy on Spanish banks in the days or weeks to come after determining how it will affect the sector’s viability.

In order to raise 3 billion euros ($2.93 billion) by 2024, a transitory bank fee was proposed in parliament by Spain’s leftist government coalition in July.

Vice-President of the ECB Luis de Guindos stated that a group of specialists from the economy, financial stability, supervision, and monetary policy were assembled to form a consensus.

“In the coming days or weeks, we could see a non-binding opinion.”

De Guindos

De Guindos did not indicate which direction the ECB experts’ judgment would swing, but he recently stated that a banking tax may have unfavorable impacts on the industry and risk endangering its viability.

At a different event, Bank of Spain Governor Pablo Hernandez de Cos informed Spanish parliamentarians that the ECB’s evaluation would concentrate on two issues: how it impacts the transmission mechanism for monetary policy, and how much it might have an effect on the banking industry’s stability.

De Cos, a member of the ECB’s governing council, claimed that in circumstances comparable to this, some drawbacks to stability had been found.

De Cos stated in July that it was difficult to develop a tax that did not ultimately influence credits. The net interest income and net commissions of banks would be subject to a 4.8% charge as part of the tax.

The proposed tax, which targets banks with a turnover of more than 800 million euros, has been criticized by top executives at Spanish lenders Santander (SAN.MC) and BBVA (BBVA.MC) for directly affecting banking performance and distorting competition.

Information from Reuters

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