Indeed we had a good and I would say a rather consensual discussion on the fiscal policy stance for the euro area.
You know that this is important for governments for designing next year’s national budgets.
I am pleased that the Eurogroup statement is very much in line with the fiscal recommendations that we presented in May and which were approved by the Council last month.
The point is that the expansionary fiscal stance of the past three years, joined with the ECB’s monetary policy, was decisive to support the euro area economy against the shocks of the pandemic and then of Russia‘s war, including the energy price. So, I think we should be proud of these decisions and the impact they had preserving our economy.
But as our economies continue to grapple with still high – albeit declining – inflation, with increased public debt, with higher interest rates, a more restrictive fiscal stance is warranted for next year. And this will happen notably through phasing out of the measures supporting energy prices. There is a broad agreement on this.
Our country-specific recommendations were calibrated to chart a course to achieve this objective, while also pursuing the crucial investments that are needed for our common priorities. This is reflected in today’s statement. As is the fact that, given the persistent uncertainty, we must stand ready to adapt fiscal policies should economic circumstances evolve.
I also emphasised today the importance of reaching a good agreement by the end of the year on the reform of our fiscal rules, a goal reiterated in the Eurogroup statement. This timeline is key to enable the new rules to be applied in time for the preparation of national budgets for 2025. And I look forward to the discussion tomorrow morning in the ECOFIN.
A few words on the international role of the euro. Good news that the euro’s global role has remained resilient despite the challenges of the economic situation. At the same time we know that, this role could even be stronger. We need to make progress along three lines:
First, greater integration of our securities markets. Accelerating work on the Capital Markets Union, as we discussed today. Second, we need a greater supply of safe assets denominated in euros. Our NextGenerationEU and SURE bonds have been gamechangers in this respect, but these of course are not permanent instruments. Third, we need to complete the architecture of the Economic and Monetary Union with progress in capital markets and also the Banking Union.
This discussion on capital markets union was very interesting because all the ministers gave a picture of their best practices and I think this is welcome and important. Of course at the same time, we know that even the largest national capital markets is not sufficient and it is small in global terms. So better integrating the national capital markets remains our key objective.
Lastly, I presented to the Eurogroup the main elements of the Commission‘s proposals of two weeks ago, setting out a framework for a possible new digital form of the euro, as a complement to cash, and to ensure that the public can continue to access and pay with euro banknotes and coins across the euro area.
I think it was very useful that the Commission presented together the proposal on cash as legal tender and the proposal on the digital euro. These mutually supportive proposals ensuring the continued access to central bank money, both in digital and physical form, in the coming years.
Now we are looking forward to engage with the Parliament and Council on this important legislative package. It will not be a conspiracy, it will be a democratic, open, transparent process in the European Parliament and with European goals.
I think this is the main message we are giving today.