Opening remarks by Christine Lagarde, President of the ECB, at the World Economic Forum, in which she focuses on three key aspects for European countries to address joint exposures to the climate, the global economy, multinational firms and foreign powers.
The first is demonstrating what is needed to make openness globally sustainable.
The EU is the most advanced example of cross-border economic and political integration because it has invested in institutions to ensure fairness – a single court and a single set of rules. And when new forces have arisen with the potential to undermine openness – the threat of competitive devaluations or of financial spillovers – Europe has not responded by raising barriers.
Rather it has sought – and is seeking – to fill the gaps in its economic and monetary union with institutional innovations like the banking union. At a time when trade tensions are rising even as global institutions are being weakened, these examples can provide useful lessons.
The second aspect is leveraging the areas where the EU is powerful, namely the Single Market.
The EU has become a leader in ensuring strict and fair competition laws which are enforced at arm’s length. This is crucial at a time when winner-takes-all dynamics are increasing in many markets, which raises concerns about firms’ political and market power.
Being the world’s largest exporter of manufactured goods and services and the biggest export market for around 80 countries gives the EU considerable power as a global standard-setter, too.
Take for example the EU’s Data Protection Directive. Since it was passed, over 30 countries have adopted EU-type privacy laws, including most OECD countries. Reflections are now also under way on how the EU’s market force can be harnessed to accelerate the fight against climate change.
The third aspect is linking Europe’s potential more visibly to people’s concerns.
If we ask Europeans today what they see as the main issues for the EU, 38% say climate change or the environment, 34% say immigration and 30% say the economic situation or unemployment.
These are mostly challenges that have a cross-border, geopolitical or technological dimension. The upshot is that the areas where Europe adds the most value – addressing challenges that are beyond the remit of nation states alone – are the areas where people now want to see results.
This provides a huge opportunity for the EU to connect more strongly with its citizens and to strengthen the foundations of the European project. Doing so would in turn set the stage for integration in more complex areas, like fiscal policies.
Full speech on ECB
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