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

matilda.sevon@bruegel.org

Read article More on this topic More by this author

Opinion

Economic priorities for new EU leadership

Europe is no longer in crisis mode. However, it remains vulnerable; it is unprepared and it is procrastinating. Following European elections this May, new leaders are about to take their positions at the main European institutions for the next 5 years. They have the power in their hands to take action. But more importantly, they have the power to convene 28 states, which, if united, can play a significant global role. What are the urgent challenges that require collective European action?

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: September 10, 2019
Read article More on this topic More by this author

Blog Post

Argentina, plus ça change…

Recent primary elections in Argentina saw the defeat by a wide margin of President Macri. This fueled market volatility given expectations of a reversal of reforms after national elections in October; the recent re-introduction of capital controls attests to the extent of the economic fallout. With Macri’s end in sight, this post will review the evolution of the Argentinian economy during his term.

By: Marta Domínguez-Jiménez Topic: Global Economics & Governance Date: September 9, 2019
Read article More on this topic More by this author

Podcast

Podcast

Backstage at BAM19: Priorities for Europe's monetary union

Backstage at the Bruegel Annual Meetings, Nicholas Barrett talks with Zsolt Darvas on Europe's monetary union.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: September 5, 2019
Read article More on this topic More by this author

Podcast

Podcast

Backstage at BAM19: Which priorities for the new EU leadership?

Backstage at the Bruegel Annual Meetings, Rebecca Christie talks with Guntram Wolff on priorities for the new EU leadership, the Annual Meetings and Commissioner Malmstrom's keynote.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: September 4, 2019
Read article More on this topic More by this author

External Publication

La Banca centrale europea

This external publication delves into the new responsibility given to the European Central Bank: supervision on banks in the euro-area. It tells its history and illustrates its functions, structure and responsibilities and the exceptional answers to respond to the "perfect storm" of the crisis.

By: Francesco Papadia Topic: European Macroeconomics & Governance Date: July 31, 2019
Read article More on this topic

Blog Post

European champion-ships: industrial champions and competition policy

This blog post investigates the debate on whether European competition rules should foster European industrial champions, or allow national champions to grow to a European scale. It explores the criteria that one would intuitively ascribe to industrial champions, illustrating the difficulties in defining either ‘European’ or ‘Champion’. It then conducts a brief look into whether EU Merger decisions have impeded the formation of ‘European Champions’.

By: Mathew Heim and Catarina Midoes Topic: Innovation & Competition Policy Date: July 26, 2019
Read article More on this topic More by this author

Blog Post

Modernising European Competition Policy: A Brief Review of Member States’ Proposals

French, German and Polish governments have jointly proposed options for modernising EU competition policy. The debate to recalibrate European competition rules was already well underway. So, it is not surprising that proposals are consistent with other statements made by France and Germany. Yet, proposals do not address current issues weighing on the international competition community, such as conglomerate effects theory or algorithmic collusion.

By: Mathew Heim Topic: Innovation & Competition Policy Date: July 24, 2019
Read article More on this topic More by this author

Blog Post

Opening speech by Bruno Le Maire

Bruno Le Maire, minister of the economy and finance, delivered the opening speech at Bruegel's event “The Eurozone agreement – a mini revolution?”, 8 July 2019.

By: Bruno Le Maire Topic: European Macroeconomics & Governance Date: July 9, 2019
Read article More on this topic More by this author

Podcast

Podcast

Director's Cut: Priorities for the new ECB president

In this Director's Cut of 'The Sound of Economics', Guntram Wolff talks to two of the authors of Bruegel's memo to the new ECB president, Maria Demertzis and Grégory Claeys, to specify the most important issues at the beginning of this eight-year cycle and to clarify the parameters within which the new incumbent will have to work.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: July 4, 2019
Read article Download PDF More on this topic

Policy Brief

Preparing for uncertainty

Memo to the president of the European Central Bank. Grégory Claeys, Maria Demertzis and Francesco Papadia present the challenges that the next ECB president will face during the upcoming mandate, reinventing monetary policy in a system riddled with uncertainties.

By: Grégory Claeys, Maria Demertzis and Francesco Papadia Topic: European Macroeconomics & Governance Date: July 3, 2019
Read about event More on this topic

Past Event

Past Event

Tech-enabled payment processes: policy implications of new developments

What challenges does a shift towards new payment processes imply for EU financial services policy?

Speakers: Rebecca Christie, Etienne Goosse, Chirag Patel, Jörn-Jakob Röber, Johannes Vermeire and Nicolas Véron Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 25, 2019
Read about event More on this topic

Past Event

Past Event

How comprehensive is the EU political realignment?

Has the left-right divide become obsolete in EU politics?

Speakers: David Amiel, Otilia Dhand, Nicolas Véron and Silke Wettach Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 25, 2019
Load more posts