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05 March 2020

Keynote speech by President Charles Michel on the international role of the euro at the Centre for European Policy Studies

Michel delivers three main messages: First, Europeans must have a clear goal in sight: for geopolitical, climate and digital matters. Next, a euro that is attractive internationally is a key element in making progress towards that objective. Finally, for an attractive euro, we need a strong EMU.

[...]First, our Union must be a leader in the world to promote its values and interests. This will take time and hard work. I believe the world needs a strong European voice. And decisive European action. When I talk to European citizens, I hear always the same thing. They say, "We want a strong, confident Europe. In words and also in action." Because whatever happens in the world has an impact on our Union.

Today, we face strong headwinds. Global competition is back. That's not great news for the rules-based, multilateral order. Our Union runs the risk of being squeezed between great powers that use their economic tools to promote their foreign policy interests.

And we must also prepare the ecological and the digital transitions. These two transitions are revolutionising our societies and economies. The green transition is probably the great challenge of the twenty first century. The challenge driving millions of young people onto the streets. A challenge all European countries have to support because we have no choice. It affects all our citizens equally.

The digital transition is happening now. Europe must be at the forefront to drive our economy and build a digital world in line with our European values. We know the magnitude of these transitions. We must capitalise on their potential. That's why European leaders have committed a few weeks ago to very ambitious goals like making Europe the first carbon neutral continent in the world.

We want our European priorities to inspire all our policies. This applies to the euro, to our next European budget, and to our single market. Acting on our ambitions is how we defend our values. And because of these values, we are proud to be European.

The euro is a concrete symbol of success that our citizens carry in their pocket every day. 19 out of 27 member states, for exactly 343 million citizens. My children do not question payments in euro when we travel across the continent. To them it comes naturally. But we forget that only a few years ago we still had to exchange French to Belgian francs or Spanish pesetas to drachma.

Even if the euro faced huge criticism at the start I hear very few people are nostalgic about their national currencies. I believe the euro can definitely boost our strategic autonomy and help us achieve our political objectives.

We live in an interconnected world. But sometimes this can limit our room for manoeuvre. Just one example: the global dominance of the dollar allows US sanctions to reach beyond US borders. This affects European companies, even when they trade legally with third countries. Sometimes we can disagree, even with our closest ally.

But a stronger international euro would certainly give us more latitude in our geopolitical decision-making. An attractive currency offers also a broader access to international financial markets. And this facilitates the funding of the massive investments needed for our digital and ecological transitions. These investments are the key to unlocking the full potential of the two transitions: sustainable development, quality jobs and innovation.

The main question is: how do we get the euro to play a more prominent role on an international stage? This cannot simply be decreed. The decisive step is our collective European action to strengthen our Economic and Monetary Union.

I am convinced that everything we do to strengthen the Economic and Monetary Union will make the euro more attractive. We need to complete the initiatives we have already started. And we need to build new instruments that will prepare our EMU for tomorrow's challenges.

Let's start with the initiatives already on the table. Our response to the economic and financial crisis has been: more Europe and more competences for our Union. But to finalise our Banking Union, two reforms must still be completed.

First, the authority that deals with failing banks must have all the financial means to carry out its duties. Second, we still need a European system to guarantee and protect our bank deposits.

But that's not enough in my opinion, the essential initiatives for tomorrow - a capital markets union, and a better management of the euro area are necessary. With a true Capital Markets Union, our innovative SMEs could better fund their projects. Our abundant savings could be better channelled into concrete green or digital investments. We all see the advantages of capital flowing freely across borders. So we really need to breathe new life into this project.

Steering our economy is a responsibility that cannot rest exclusively with the European Central Bank. European political leaders must strengthen the EMU so that monetary policy is not "the only game in town."

Economists have long called for a budget for the euro area. The new BICC (budgetary instrument for convergence and competitiveness) currently taking shape is a small step but it is a step in the right direction. The euro is the monetary expression of our shared destiny. And strengthening the EMU is a collective responsibility.

One last word. We need to finance our common projects together. And we can do that by starting with pragmatic steps. For instance, the European Investment Bank could issue a larger number of safe green bonds, if it had additional capital to support the green and digital transitions. This would also expand the pool of risk-free assets denominated in euro, which is currently too small. [...]

Full speech

© European Council

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