Economic Governance in the Euro Area - The Role of the ECB

The EU is experiencing a number of delicate and complex challenges, struggling to address a number of overlapping crises and issues. These demand urgent and decisive action, both at the national and supranational level, in order to revive trust in a European project that has already provided important benefits to its members over the years. Benoit Coeuré, Executive Board member of the ECB, expressed these views in a speech entitled “Having Confidence in Europe” delivered during a conference held in Rome on 26 September. Organised by the Istituto Affari Internazionali (IAI), the Centro Studi sul Federalismo (CSF) and the Italian Banking Association (IBA), the event was convened within a broader series of conferences on ‘The Future of the European Economy’.

In assessing the EU’s current challenges, Benoit Coeuré, highlighted how migration, the economy and terrorism have slowed the pace of European integration. The Executive Board member placed great emphasis on the fact that large numbers of EU citizens lack confidence in Europe as a result of these crises. This lack of confidence has strengthened anti-European and Eurosceptic movements across the continent, as demonstrated by the recent Brexit vote in the United Kingdom. This declining popular trust in Europe demands urgent action and needs to be addressed head-on by national governments and EU institutions. The ability to provide answers to these challenges rests primarily with single member states and EU institutions and goes beyond the areas of competence of the ECB. In answering questions posed by IAI Vice President Fabrizio Saccomanni and the President of the CSF, Alfonso Iozzo, Benoit Coeuré warned against an excessive focus on contemporary emergencies, reminding the audience about the need to address certain structural challenges confronting the European project. Without fist resolving these structural issues, Europe risks not having the necessary resources to deal with these more immediate challenges.

Coueré also stressed the need to reaffirm the trustworthiness of the European project, highlighting how many member states have drawn important benefits from the project and how the single Euro currency has played a key role in keeping European states together during these times of crisis. “None of us want to live in a half-built house because it will get very uncomfortable as soon as the next storm hits”. Coeuré used this metaphor as a means to drive home the necessity of completing the EU Monetary Union, particularly after the Brexit vote. Frankfurt expects single Member States to do their part by implementing structural reforms in order to increase productivity. It is undeniable, however, that the most significant actions will need to come from EU institutions and Eurozone countries, particularly in completing the EU banking, economic and fiscal union. EU institutions need to be equipped with the tools and authority to successfully deal with future challenges. To attain these objectives we need to reinforce European institutions and further develop the processes of integration and convergence. In concluding his talk, Coeuré cited Winston Churchill in emphasising that optimism and confidence are necessary above all during times of crises.