Bank of Spain Governor: Catalonia’s independence would bring “bankruptcy”

Madrid (ACN).- On Monday afternoon Luís María Linde, Governor of the Bank of Spain, stated in Madrid that “independence is unviable”, indirectly referring to Catalonia. Linde, who was appointed to this position by the current Spanish Government in mid 2012, argued that the European Central Bank (ECB) only funds Member States; therefore Catalonia would be “obliged to issue its own currency” and have “its own banking supervisor”, according to him. On Tuesday, the President of the Catalan Government, Artur Mas, replied that “nobody believes” in the “apocalyptic” message sent by Linde. Furthermore, Mas asked the Governor for “caution” and “to serve the whole of Spain and do not take sides”. In fact, Linde’s statement  followed those made by the Spanish Finance Minister, Cristóbal Montoro, who in the morning said that, if Catalonia were independent, it would have “to abandon the Euro”. On top of this Montoro added that Catalonia’s independence could even put the entire Eurozone at risk. The Spanish authorities’ statements contradict those made by European institutions. In September, the European Commission confirmed that an independent Catalonia could continue to use the Euro. In addition, the main Catalan parties supporting independence have insisted on continuing to use the Euro whatever happens.

Luís Maria Linde, appointed Governor of the Bank of Spain by the Spanish Government in June 2012, completed on Monday afternoon the statement launched in the morning by the Spanish Finance Minister, Cristóbal Montoro. Montoro stated in Madrid that “the divorce” supported by Catalonia’s two largest parties is “impossible”, since it implies “abandoning Europe” and “breaking the Euro”. He asked Catalan politicians to concentrate on “recovering from the economic crisis” because “they have the entire support of the Spanish Government” in this task. “We  live in an integrated Europe and proposing a divorce that is impossible to do makes no sense at all”, he added.

Catalan banks would end up in “bankruptcy”, states Linde

In the afternoon, during the annual convention of the Financial Markets Association, Luís María Linde stated that “according to European regulations, if a small territory splits from a larger one, the banks based in this small territory can no longer be funded by the European Central Bank”. Therefore, according to him, Catalonia would not have the liquidity guaranteed by the ECB. Linde added that the European Central Bank only issues loans with guarantees, which could not be given by Catalonia if it does not have its own currency and its own banking supervisor. “The assets would be in a local currency and the liabilities would be in Euros”, he argued. The Governor added that in this scenario Catalan banks would end up in “bankruptcy”. All this draws “a very negative scenario”, where “both the small territory and the larger one would suffer a lot”.

Mas rejects the “apocalyptic” message

The Catalan President and leader of the Centre-Right Catalan Nationalist Coalition (CiU) totally rejected Linde’s words. Mas, who was Catalan Finance Minister between 1997 and 2001, criticised messages where “everything is apocalyptic” and present “an eternal hell” for those supporting Catalonia’s sovereignty. However, according to Mas, “nobody believes” in this kind of message. Mas, who is on a business trip in India, asked Linde for “caution” and reminded him that “he should serve the whole of Spain and not take sides in such issues”. Mas highlighted that within the European Union there are countries such as Denmark and Sweden, which have a similar size to Catalonia and do not have the Euro, which “are doing very well and much better than Spain”. “And outside the EU there are others like Switzerland and Norway”, he added. However, he emphasised that Catalonia aims to remain in the Euro zone if it becomes an independent state.