Past Event

Eurozone agreement: a mini revolution?

What does the new Eurozone budget do, and what does it not do? What are its strengths and weaknesses?

Date: July 8, 2019, 9:15 am Topic: European Macroeconomics & Governance

video & audio recordings

summary

This June, the Eurogroup convened to discuss the future of the Eurozone, reaching three key agreements.  First, it established a Eurozone budget, funded through the EU, to take force in 2021.  The group also discussed means of strengthening the European Stability Mechanism to not only respond to but also to prevent crises.  The agreements reached were the creation of a common backstop for the single resolution fund as the ultimate safety net in the case of a banking crisis and a reform of the provision of precautionary credit lines.

Bruegel was honored to host Bruno Le Maire, French Minister of the Economy and Finance, to discuss his view of this agreement as a “mini revolution” and the further progress necessary to strengthen the Eurozone.

Minister Le Maire presented ambitious goals for the future of the Eurozone.  Although the history of the Euro demonstrates its overwhelming success, he also noted that the 2008 crisis illustrated weaknesses in the Eurozone architecture that must be addressed.  The Minister stated that the Eurozone should be not just a shared currency but a strong monetary union, with the ultimate goal of making the Euro the strongest currency in the world.

Le Maire began by discussing the Eurozone budget. He emphasized that the creation of a Eurozone budget was revolutionary and that such a notion would have been unimaginable even two years ago.  The Minister was clear that the current proposal is not ideal, but expressed optimism for future improvements.  For example, he emphasized that France would not be satisfied with a tiny budget and hoped to expand the sources of the budget beyond EU funding to include national resources from Eurogroup countries.  He also noted the importance of achieving autonomous decision-making on the part of the Eurozone 19, without the interference of other EU Member States.  Le Maire noted that an Inter-Governmental Agreement would likely be necessary to establish the decision-making procedure.

Next, Minister Le Maire explained the absolute necessity of having more growth within the Eurozone.  He called the lack of growth a failure the reason for the rise of populism in Europe.  The Minister argued that economic prosperity and growth were the way to achieve political stability and defeat populism.  Thus, he proposed a compact for growth for the Euro area in which countries would agree to 1) implement structural reforms and control public finances, 2) increase investment, especially in the domains of innovation and infrastructure, and 3) strengthen the Euro area, including through support of a Eurozone budget.

Turning to integration, Le Maire made three recommendations for deepening Eurozone integration.  First, he advocated the completion of the banking union.  Second, he highlighted the importance of establishing a Eurozone capital market union in order to catch up to China and the United States in the financing of innovation.  Third, he was adamant that the Eurozone budget must adopt a stabilization function as the best way to respond to economic shocks.  The Minister admitted the presence of a vocal opposition to a stabilization function, but stressed that the majority of Eurozone countries and economic experts agree that this must be a long term goal.

In the context of making the Euro the strongest currency in the world, the Minister also discussed strengthening the international role of the Euro.  He said that the Euro is already fairly widely used in global transaction, but must be made a larger reserve currency.  In fact, the Euro only represents 20% of international reserves compared to the U.S. dollar which represents 60%.  Advantages of increasing the Euro’s prevalence would include greater EU sovereignty in foreign policy and less risky exposure to exchange rates in European imports and exports.

In conclusion, Minister Le Maire stated that there is a need for a new impetus to the European construction.  He said that the pace of decision-making must accelerate in order to implement Eurozone integration and make the Eurozone a great success.  Only in this way can Euro-skepticism be defeated and can Europe remain competitive in the 21st century.

Notes by Kyra Whitelaw

EVENT MATERIALS

Minister Bruno Le Maire’s speech

Schedule

Jul 8, 2019

09.15-09.45

Check-in and breakfast

9.45-10.05

Keynote speech

Chair: Guntram B. Wolff, Director

Bruno Le Maire, Minister of the Economy and Finance, France

10.05-10.45

Responses and Q&A

10.45

End

Speakers

Bruno Le Maire

Minister of the Economy and Finance, France

Guntram B. Wolff

Director

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

[email protected]

Read about event More on this topic
 

Past Event

Past Event

The Euro area after COVID-19 - a conversation with Mario Centeno

At this event we will welcome Mario Centeno to talk about his time as President of the Eurogroup and reflect on the future of the Euro area.

Speakers: Mário Centeno and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 1, 2020
Read about event More on this topic
 

Past Event

Past Event

The need for market-based finance after COVID-19

How do COVID-19-caused financial dislocations inform policy responses?

Speakers: Maria Demertzis, Gabriel Makhlouf and Guntram B. Wolff Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 29, 2020
Read about event More on this topic
 

Past Event

Past Event

Redefining Europe's role after the COVID-19 pandemic

Amidst COVID-19: how to keep markets integrated when states play a bigger role in the EU and its neighbourhood?

Speakers: Gabriele Bischoff, John Erik Fossum, Kalypso Nicolaïdis and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 25, 2020
Read about event More on this topic
 

Past Event

Past Event

The role of AI in healthcare

How can AI help us fight through a pandemic crisis?

Speakers: Dimitris Bertsimas, Georgios Petropoulos, Effy Vayena and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 23, 2020
Read about event More on this topic
 

Past Event

Past Event

Biological threats and EU preparedness: How can we make the system more resilient?

Can the EU handle biological threats?

Speakers: Maria Demertzis, Magnus Normark, Ilkka Salmi, Jukka Savolainen, Anne Sénéquier and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 18, 2020
Read article Download PDF
 

Policy Contribution

Is the COVID-19 crisis an opportunity to boost the euro as a global currency?

The euro never challenged the US dollar, and its international status declined with the euro crisis. Faced with a US administration willing to use its hegemonic currency to extend its domestic policies beyond its borders, Europe is reflecting on how to promote it currency on the global stage to ensure its autonomy. But promoting a more prominent role for the euro is difficult and involves far-reaching changes to the fabric of the monetary union.

By: Grégory Claeys and Guntram B. Wolff Topic: European Macroeconomics & Governance, Global Economics & Governance Date: June 5, 2020
Read about event
 

Past Event

Past Event

CANCELLED: How adequate is the European toolbox to deal with financial stability risks in a low rate environment?

Bruegel is delighted to welcome the governor of the Central Bank of Ireland, Gabriel Makhlouf. He will deliver a keynote address about how adequate the European toolbox is to tackle financial stability risks in a low rate environment. Following his speech, a panel of experts will further discuss the topic.

Speakers: Gabriel Makhlouf, Guntram B. Wolff and Agnès Bénassy-Quéré Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: March 31, 2020
Read article More on this topic
 

Blog Post

As the Coronavirus spreads, can the EU afford to close its borders?

In 2018, 320 million trips were made between EU countries and almost 2 million people crossed Schengen borders to go to work. Stopping them would cause serious economic disruption.

By: Raffaella Meninno and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: February 27, 2020
Read article More on this topic More by this author
 

Opinion

European capital markets union, by rule and by choice

While the euro is now a leading global currency and the European Central Bank has become a comprehensive banking supervisor, Europe’s markets have been treading water.

By: Rebecca Christie Topic: Finance & Financial Regulation Date: January 23, 2020
Read about event More on this topic
 

Past Event

Past Event

The Great Reversal-Causes and implications of the rising corporate concentration in the US

During this event, Thomas Philippon presented his thesis on market concentration and explained the reasons behind the rising corporate market power in the US.

Speakers: Thomas Philippon, Georgios Petropoulos and Reinhilde Veugelers Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 11, 2019
Read about event More on this topic
 

Past Event

Past Event

Issues in productivity measurement

This Bruegel public event is organised in the framework of MICROPROD, a research project that aims to improve our understanding of productivity, its drivers and the way we measure it. Panellists and participants will take stock of the current challenges in productivity measurement, discuss the preliminary findings of the project and reflect on future research and policy priorities.

Speakers: Maria Demertzis, Filippo di Mauro, Alexandr Hobza, Peter Bøegh Nielsen and Lynda Sanderson Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: December 4, 2019
Read article More on this topic
 

Blog Post

A Major Step Toward Combating Money Laundering in Europe

Combating money laundering in Europe took a momentous step with finance ministers of France, Germany, Italy, Latvia, the Netherlands, and Spain putting forward a joint proposal.

By: Nicolas Véron and Joshua Kirschenbaum Topic: Finance & Financial Regulation Date: November 25, 2019
Load more posts