Brussels Economic Forum on 4 May 2023
Good afternoon and thank you to the Commission, Paolo and all the team at DG ECFIN (Economic and Financial Affairs) for inviting me to the Brussels Economic Forum.
We have heard a lot so far and the discussions have been so informative, rich and thought provoking, with so much ground covered, from:
- inflation
- the public finances
- financial stability
- digital currencies
- technology, and
- supply chains to name just a few.
So I am not going to try to summarise the main conversations or outputs, but what I can do is to offer a euro area perspective and how the discussions today might shape Eurogroup priorities over the next 12 months.
In thinking of how to do this, one way is to focus on the three letters of the Brussels Economic Forum – B, E and F – as I think these succinctly represent three priority areas for the Euro Area and for the Eurogroup.
B
So first and turning to ‘B’, I have Banking Union which will be of no surprise to many of you in this room.
It is fair to say that advancing Banking Union has been one of my priorities since taking up the office of President of Eurogroup back in July 2020.
Last summer at Eurogroup, after much time, effort and political capital, ministers reached an agreement on the future of the Banking Union with a clear statement.
Specifically, we asked for steps to be taken to strengthen the common framework for bank crisis management and national deposit insurance schemes or CMDI in short.
Two weeks ago, the Commission came forward with legislative proposals in this area, which encompassed all of the areas that Eurogroup emphasised in our statement last June.
Just last Friday, at the Eurogroup informal meeting in Stockholm, we had a really frank and good discussion on the banking sector, discussing recent developments and the broad outlines of the CMDI proposal itself.
As things stand, there are areas where ministers agree but also, as one would expect, areas where we are not yet aligned. However, I remain confident that we will converge in the months ahead.
Events over the last few months and days in both the US and Europe have reaffirmed to all of us, if we needed affirmation, the need for us to deepen the banking union.
E
Moving on from ‘B’ to ‘E’, and specifically the economic governance review.
Similar to the work underway on banking, last week we saw the Commission tabling legislative proposals on planned reforms to Europe’s fiscal framework.
This has been a subject that has featured prominently in Eurogroup discussions over the past two and half years, starting from the activation of the general escape clause back in March 2020. While the focus on legislative progress for the EU27 sits with ECOFIN, Eurogroup has discussed the framework and specifically its euro area aspects on a number of occasions.
We also regularly set out budgetary policy guidance for the euro area through periodic Eurogroup statements.
On the legislative proposals, I think the Commission, the Swedish Presidency, the ministers, the officials, as well as all of the stakeholders deserve a lot of credit for getting us so far to date.
Similar to the Banking Union, the easiest thing to do, would have been to do nothing and to wait. Instead, the Commission has again shown its ambition and its right of initiative in putting forward detailed proposals.
This is a complex project but agreeing on an improved framework is vitally important.
There are again areas where there are disagreements across the member states but similar to the banking proposals, these gaps can be closed. The proposed changes go a long way in the right direction – the framework is simpler, more risk based with a greater focus on the medium-term.This in turn will make implementation easier and enforcement more transparent.
The proposals also clearly acknowledge the need for investment, growth and for debt sustainability.
We can all reach agreement in time for 2024.
It should be emphasised that there is a vital euro area dimension to this successful conclusion. A credible medium term budgetary framework is an essential pillar in the architecture of the euro.
F
So with ‘B’ and ‘E’ covered, I can move to ‘F’, which is future and quite apt as I close out my remarks.
In listening to the excellent panels and discussions today, this has re-affirmed to me two other key economic priorities for the euro area.
These are the digital euro and access to capital.
Digital Euro
The Eurogroup has been actively engaged in discussions on a digital euro for well over a year. We have had really constructive engagement with both the ECB and the Commission.
We welcome the latter’s intention to propose legislation on the digital euro and we will continue our political engagement going forward.
Finance ministers are very attune to the fact that so many of the decisions on the digital euro are inherently political as they will have influence the daily lives of our citizens. This has come across to me again today in listening to you all and it underscores the importance of close and constructive engagement as the design of the digital euro crystallises.
Capital
A second priority area is capital. As President of Eurogroup, I have chaired close to 36 meetings. Investment needs have been flagged at nearly every single meeting.
We are all acutely aware that Europe has extensive financing requirements, which has been amplified by both a lack of investment in the previous decade but also the need to fully embrace digitalisation and climate change.
Investment needs will be very large over the next decade, sourced from both private and public sources. This will be crucial to bolster euro area competitiveness.
At the Euro Summit in March, the European leaders called on all us to step up efforts and to take forward Capital Markets Union.
This is clearly a vast project but just to reemphasise that EMU is totally dependent on a vibrant and well integrated capital market. From my perspective, I think this is a good time to take stock of where we are, in terms of funding, innovation and competitiveness.
From this, we can get a better picture of where we stand on CMU and what we all need to do to fully unlock our capital markets.
So I will conclude here but I would like to single out the work of the Commission over the few months in getting us to a point where legislative proposals have been delivered across two very important work streams.
This is no small task and it is never easy.
The world is changing so fast, full of disruption, of challenges and of opportunities. The euro has demonstrated resilience in confronting recent challenges – a pandemic and a war. I am certain that it will continue to do so and show that economic interdependence is a source of strength for Europe.
(check against delivery)
Source – Eurogroup