Almost fifteen days ago, Spain and France’s presidents saw to each other in Paris during the European conference on youth employment organised by Hollande. The French leader gives Rajoy back the visit to celebrate in Madrid the XXIII Spain-France summit. Both governments will deal with different projects to improve transport and energy interconnections between Spain and France. In fact, they are forecast to sign an agreement about the launching of Perpignan-Barcelona high speed link, which will allow to travel directly to Paris from next 15th of December.
Nevertheless, it is not a secret for anyone that Rajoy and Hollande will also approach how to regulate the future euro zone banking union. Hollande is pushing for European authorities to adopt common measures to prevent costly bank failures and to directly recapitalise lenders in difficulty. Last week he won Italy’s Prime Minister Enrico Letta’s support and now wants Rajoy for their team as well.
The reorganisation of the Spanish banking sector has meant a hard work of adjustment for the country, but also an exception within the European environment, and consequently can be considered an example to follow for the rest of euro zone partners. France and Germany’s financial systems, as well as Italy’s have similar troubles to the ones that Spanish entities have resolved: a huge amount of non performed loans and an insufficent capitalisation. For instance, half of German banks will be out of the next European asset quality review and later European Central Bank stress tests.
Hollande is also expected to discuss France’s proposal for an “economic government” of the eurozone with a permanent Eurogroup chairman to oversee members’ economic policies.
This Spain-France’s summit has been hold the same day in which Merkel’s conservative party and social democratic SPD has reached an agreement to form a big coalition government.