The Governor of the Bank of Lithuania, Vitas Vasiliauskas, called, on Friday 28 February in Brussels, for the creation of a "pan-European entity" to fight money laundering in the European Union.
"I am a big fan of a pan-European solution" to have a "centralised" entity active in this field and not just focused on banks, he told some journalists. He expressed his preference for a separate entity from the European Banking Authority, which brings together national banking supervisors and was given more powers at the end of 2018 in the latest anti-money laundering legislative reform (see EUROPE 12161/11).
The idea of creating a pan-European entity remains on the table as the Commission prepares to present, in March, a new specific action plan and a European blacklist of non-Member States at risk (see EUROPE 12434/2).
Mr Vasiliauskas highlighted the efforts made in Lithuania in the fight against money laundering to restore the reputation of his country and the Baltic countries in general since the closure of "two laundromats" in 2011 and 2013 in his country, including Ūkio bankas. We are "very pro-active," "adapting our own structures", he said. He added that the ratio of bank deposits from foreign income to total savings has decreased from 6% in 2003 to a current 2.5%.
In recent years, the three Baltic countries have been rocked by several money laundering cases originating in Russia and involving subsidiaries of Scandinavian banks. In fact, it was "a big surprise" to learn that subsidiaries of Scandinavian banks had been used for money laundering, Mr Vasiliauskas said.
Despite this loss of reputation, Lithuania has become, after Brexit, the leading jurisdiction in the EU in the e-money market. No fewer than “60” fintechs have obtained an authorisation in our country, "a fourfold increase in five years", said the Governor of the Bank of Lithuania. He referred to a "regional initiative" on prudential supervision launched with the other two Baltic countries.
Finalising Banking Union in the euro area
For Lithuania, which joined the euro area in 2015, it is crucial to complete the work already begun to strengthen the governance of Economic and Monetary Union (EMU). This includes the creation of a European Deposit Insurance Scheme (EDIS), the third pillar of banking union in the euro area, and the deepening of capital market union.
For Mr Vasiliauskas, EDIS must be up and running "before the next crisis". He said he was prepared to "accept any kind of proposal" that would promote a gradual pooling of risks related to bank deposits.
Asked about the idea of inviting major euro area banks to diversify their purchases of sovereign bonds in order to hold a safe portfolio approach, the governor said that this idea could help convince countries such as Italy. This Member State is opposed to the resumption of political negotiations on the completion of the banking union because, in particular, of the desire of other countries, such as Germany and the Netherlands, to create a prudential risk for the holding of sovereign bonds by banks (see EUROPE 12384/1).
No monetary decision in March in response to the coronavirus outbreak
Asked about the impact of the Covid-19 virus on the European economy, Mr Vasiliauskas said that the European Central Bank (ECB) was following developments on the ground very closely. Nevertheless, it does not expect the Board of Governors to adopt further measures on Thursday 12 March, to combat low inflation and a further slowdown in the euro area economy.
We have more of a "wait and see approach ", he said.
Finally, on the ongoing assessment of the ECB's monetary policy strategy (see EUROPE 12410/1), the Chairman of the Bank of Lithuania referred to an exercise aimed to "measure the effectiveness of the monetary policy", its "side effects" and improving the "communication" of the European institution on its action. How to take climate change into account will also be part of it.
"I don’t expect any radical changes to the way we operate", said Mr Vasiliauskas, for whom price stability will remain the ECB's primary objective. (Original version in French by Mathieu Bion)