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There is no way that Europe can ever gain true global political relevance and economic policy independence without the euro as a strong and globally relevant reserve currency and a related independent payment system. And a necessary condition is a healthy and well functioning financial sector with the systemically relevant banks at the core, which is also of central importance to sustainable economic success including employment, consumption, and investment.

«European banks have again and again wasted taxpayers and shareholders money»

Since the 2008 Global Financial Crisis (GFC) the U.S. banks continued winning market share against their European competitors, this due to their effective crisis management and balance sheet rehabilitation. The big losers remain the European banks, which more than ten years after the 2008 GFC are still trading at a fraction of their peak equity prices and at only half of their book value.

They have again and again wasted taxpayers and shareholders money and thrown billions into recapitalizations, and this without having ever adapted their business models nor strategies.

Unfortunately, there has been no political will in Brussels to confront the national capitals who have defended their national banking champions to this day. Completion of the banking and capital market union would be much needed in order to put an end to the dysfunctional state of the European financial sector which keeps producing high economic opportunity costs for the public and private sectors.

«Much more drastic measures should be taken»

And you should not get misled by headlines such as that Deutsche Bank will cut 18’000 jobs, as they should have done that already ten years ago. As of today, much more drastic measures should be taken – and this because of big structural over-capacities, continued negative interest rates, ongoing commoditization of core banking services and fast advances in technology.

In 2019 the euro, which is a big success story by having delivered convenience, value preservation and security, has celebrated its 20th birthday. The euro is a global currency but still well below its potential importance because of an incomplete banking and capital market union. And the ECB had, unfortunately, to do too much of the post-2008 GFC heavy lifting with nontraditional monetary policy due to the lack of countercyclical fiscal policy.

«The lack of structural reforms might lead Christine Lagarde into the field of the New Monetary Policy»

I have no doubts that Christine Lagarde as the successor of Mario Draghi at the ECB will continue to deliver «whatever it takes», but chronically ultra-low interest and inflation rates and the continued lack of structural reforms and more comprehensive economic policies and support of EU member states might lead her in the next recession or crisis situation into the untested field of the New Monetary Policy (NMP). This would add another chapter to Europe's changeful history.

Beat Wittmann is chairman and partner of Zurich-based financial advisory firm Porta Advisors for more than four years now. His more than 30-year career in Swiss banking includes stints at both UBS and Credit Suisse as well as Clariden Leu and Julius Baer. He operated his own firm from 2009 to 2015, first independently and more recently under the Raiffeisen Group.

Previous contributions: Rudi Bogni, Peter Kurer, Oliver Berger, Rolf Banz, Dieter Ruloff, Werner Vogt, Walter Wittmann, Alfred Mettler, Peter Hody, Robert Holzach, Craig Murray, David Zollinger, Arthur Bolliger, Beat Kappeler, Chris Rowe, Stefan Gerlach, Marc Lussy, Nuno Fernandes, Richard Egger, Maurice Pedergnana, Marco Bargel, Steve Hanke, Urs Schoettli, Ursula Finsterwald, Stefan Kreuzkamp, Oliver Bussmann, Michael Benz, Peter Hody, Albert Steck, Martin Dahinden, Thomas Fedier, Alfred Mettler, Brigitte Strebel, Peter Hody, Mirjam Staub-Bisang, Nicolas Roth, Thorsten Polleit, Kim Iskyan, Stephen Dover, Denise Kenyon-Rouvinez, Christian Dreyer, Kinan Khadam-Al-Jame, Robert Hemmi, Anton Affentranger, Yves Mirabaud, Katharina Bart, Frédéric Papp, Hans-Martin Kraus, Gerard Guerdat, Didier Saint-Georges, Mario Bassi, Stephen Thariyan, Dan Steinbock, Rino Borini, Bert Flossbach, Michael Hasenstab, Guido Schilling, Werner E. Rutsch, Dorte Bech Vizard, Adriano B. Lucatelli, Katharina Bart, Maya Bhandari, Jean Tirole, Hans Jakob Roth, Marco Martinelli, Beat Wittmann, Thomas Sutter, Tom King, Werner Peyer, Thomas Kupfer, Peter Kurer, Arturo Bris, Frederic Papp, James Syme, Dennis Larsen, Bernd Kramer, Ralph Ebert, Marionna Wegenstein, Armin Jans, Nicolas Roth, Hans Ulrich Jost, Patrick Hunger, Fabrizio Quirighetti, Claire Shaw, Peter Fanconi, Alex Wolf, Dan Steinbock, Patrick Scheurle, Sandro Occhilupo, Will Ballard, Michael Bornhaeusser, Nicholas Yeo, Claude-Alain Margelisch, Jean-François Hirschel, Jens Pongratz, Samuel Gerber, Philipp Weckherlin, Anne Richards, Antoni Trenchev, Benoit Barbereau, Pascal R. Bersier, Shaul Lifshitz, Klaus Breiner, Ana Botín, Martin Gilbert, Jesper Koll, Ingo Rauser, Carlo Capaul, Claude Baumann, Markus Winkler, Konrad Hummler, Thomas Steinemann, Michael Welti, Christina Boeck, Guillaume Compeyron, Miro Zivkovic, Alexander F. Wagner, Eric Heymann, Christoph Sax, Felix Brem, Jochen Moebert, Jacques-Aurélien Marcireau, Peter Hody, Ursula Finsterwald, Claudia Kraaz, Michel Longhini, Michael Welti, Stefan Blum, Zsolt Kohalmi, Karin M. Klossek, Nicolas Ramelet, Søren Bjønness, Lamara von Albertini, Andreas Britt, Gilles Prince, Fabrizio Pagani, Darren Willams, Salman Ahmed, Stephane Monier, and Peter van der Welle, Swetha Ramachandran, and Teodoro Cocca.