The outgoing president of the European Commission fired a direct salvo at the Bank of Spain in a speech a few days ago, blaming Spain’s central bank for the economic crisis and the collapse of the property market.
José Manuel Durão Barroso charged the bank with “major errors in supervision” during a seminar at Menéndez Pelayo University in Santander.
Barroso used the speech to deflect blame from the EU, mocking the information that was flowing from Spain before the crisis. Whenever the Commission asked about Spain’s market, they were told “the Bank of Spain was the best central bank in the world,” he said, according to translations in the English press.
“Each time we asked how the banks were in Spain, how were the savings banks in face of the rumours in the market, the response was: ‘Everything is perfect’,” Barroso told the forum.
Barroso’s accusation is hardly shocking. And scholars can spend many hours debating the pros and cons of the EU’s handling the run-up to the crisis. Bbut the straight-forward nature of Barroso’s attack on Spain’s top financial institution is still worthy of note. It is rare to hear a top-level politician use such direct language to criticize a powerful entity, even if he was simply trying to defend the EU’s performance.
The Bank of Spain “allowed the growth of private debt, the problems in the housing market, and that entire bubble. And was that the responsibility of the European Central Bank, the International Monetary Fund or [German Chancellor Angela] Merkel?” Barroso said. “Those were very important supervision errors. And we need to take that on board.”
Of course, the EU might have a right to complain, since it poured €41 billion into Spain’s banking system in 2012 to prop up the market. In the long run, the crisis will result in a stronger EU, he said.
“The crisis had as a consequence an unprecedented strengthening of the community’s powers,” Barroso said. “We have gone towards more, not less, integration.”