The collapse of Silicon Valley Bank in the US was discussed at yesterday’s meeting Eurogroupwith president Pascal Donahue saying eurozone banks are in good shape and not directly exposed to Silicon Valley Bank (SVB)

“We will continue to monitor the situation carefully,” said Mr Pascal Donahuenoting that the problems stem from SVB’s particular business model, but the picture in Europe is very different.

He added that banks in Europe are generally in good shape because they have strengthened a lot in recent years, are closely supervised by national and European authorities, and under the Basel Committee on Banking Supervision rules are applied to all banks in Europe. EU.

“There is no direct exposure to SVB, but this is a reminder for us that there can be a shock in the banking system at any time, so it is important to ensure the resilience of our banking system,” the Eurogroup president said.

For his part, the Finance Commissioner Paolo Gentiloni he said that the eurozone economy is in slightly better shape this year than expected (a few months ago), but stressed that uncertainty remains very high.

Regarding the collapse of SVB, P. Gentiloni emphasized that in the EU the presence of this bank is very limited and therefore no immediate consequences are seen. “Of course we are closely following the developments and have noted the decisive reaction of the American authorities,” he added.

Regarding the guidelines for fiscal policy in 2024, the Economy commissioner noted that member states must prepare medium-term fiscal plans which they should present by April. “With the deactivation of the general escape clause at the end of 2023, member states should implement prudent fiscal policy to ensure stability and facilitate the effective transmission of monetary policy,” he stressed. He also added that member states should gradually phase out energy support measures, starting with the least targeted measures, and follow a “prudent fiscal policy”, depending on the level of their public debt. He also stressed that Member States should continue to protect nationally financed public investments and ensure the effective use of the Recovery and Resilience Facility (RRF) and other EU Funds, especially in light of the green and digital transition.

Regarding the discussions on the reform of the economic governance of the eurozone, P. Gentiloni indicated that they are proceeding in a very constructive way. “We had a consensus discussion today on the aspects of the reform and tomorrow at the Ecofin Council we will discuss the conclusions on the broader aspects of the reform,” he said. The Commission is expected to present its legislative proposal within April.

Regarding inflation, the Economy Commissioner said risks remain high. On the one hand, it appears to have passed its peak as it has been declining for 4 consecutive months (from 10.6% in October to 8.5% in February), but on the other hand, core inflation continues to rise and exercise significant pressure on prices.

Finally, the head of the European Stability Mechanism (ESM), Pierre Gramenia, emphasized that the economic outlook for the eurozone has improved and recession is now less likely. For this reason, additional fiscal incentives must be reduced.