Panetta: ‘Bank mergers are a good thing. The spread? The epicentre is the US’

Bank mergers between financial institutions from different countries “represent a further step towards the completion of the banking union. Mergers that are analysed and assessed positively by the supervisory authorities are certainly a step in the right direction.” This was stated by the Governor of the Bank of Italia, Fabio Panetta, after the ECB officially authorised Unicredit’s acquisition of Commerzbank yesterday.

As for the recent rise in yields on government bonds in Europe, this is a consequence of the situation in the US financial markets, “where there is high inflation, expectations of monetary tightening and public finances that are running higher than expected” said the Governor of the Bank of Italia, Fabio Panetta, speaking on the sidelines of the annual meetings of the World Bank and the International Monetary Fund.

Panetta points out that 60–70 per cent of the global financial market consists of assets and liabilities denominated in dollars, and in Europe ‘we are experiencing the spillover effects of high US interest rates, with the difference being that the US has a growing economy, so the rise in rates has a lesser impact than in Europe, where economic growth is slower’.

It is also worth noting, as Panetta observes, that the markets ‘are focusing on expectations of potential political instability in Europe’. The reference is to France, which has also seen its spread against the Bund widen. Uncertainty, Panetta points out, unsettles the markets. According to the Governor, there is no ‘weakening of any country; interest rates have also risen in Germany, a country that is returning to growth and has public finances that, despite economic expansion, remain in excellent health’.