20 April 2017

Speech by Commissioner Moscovici at the Peterson Institute for International Economics, Washington DC: "Europe's pivotal year"

I believe a more cohesive eurozone must rest on three pillars:

• First, a fully-fledged Banking Union which we do not have yet, to ensure that the banking sector in the eurozone is reliable and that non-viable banks are resolved without recourse to taxpayers' money and with minimal impact on the real economy. Work is ongoing with Member States on further risk-reduction and risk-sharing measures to strengthen the Banking Union. It is slow and it is painful, I must say, because striking the right balance between responsibility and solidarity is a challenge, as always in the EU.
• The second pillar is stabilization and convergence tools. We cannot just sit and wait and pray for convergence to happen in the long run. If it is not happening, then let's make it happen. And the sooner, the better! We all know what the answer is: clearly a fiscal capacity for the euro area. Work has also been ongoing for years to refine the concept. I remember I heard developments about that in 2013 as finance minister. The thinking today is much more mature than it was in the aftermath of the crisis. It is now a matter of political choice. But we are ready to make the right proposal.
• And the third pillar: we must enhance democratic accountability. Decisions affecting the wellbeing of millions of Europeans cannot be made behind closed doors, late at night, by a bunch of finance ministers. I represent the Commission in the Greek talks, and I have had dozens of those meetings which were secret and which would have really seemed strange to people if they had been inside the room. These decisions must be based on a still-to-be-created sense of general interest within the euro area. They should be subject to stronger democratic oversight and accountability mechanisms. The European Parliament – to make it clear, I was twice a member of this parliament – cannot be an afterthought – it must be at the heart of efforts to strengthen the legitimacy of eurozone decision-making. And my strong belief is that we also need a minister – if the word 'Minister' creates some fear here and there, let's call it a 'High Representative' – for Economy and Finance in the eurozone who could, as is the case for external policy, be at the same time a member of the Commission and chair of the Council, i.e. the Eurogroup. I advocate for a Commissioner who at the same time chairs the Eurogroup, and I think this is the right way to handle things.

How is this going to play out? The Commission will present a reflection paper on deepening the Economic and Monetary Union at the end of May. It will be built on the Five Presidents' Report of 2015 and will contain ambitious ideas. It will be guided by the principle that greater risk-sharing and greater risk-reduction are not opposed but must advance in parallel – indeed, they are two sides of the same coin. The fact that this is an election year must be seen as opening new possibilities: there could be a window of opportunity later this year, after the French and German elections, to move forward decisively and I believe it is essential that we do so.

Delivering real economic dynamism via a deep reform of the economic governance of the Economic and Monetary Union , I'm conscious that I've been a politician for too long – just to rely on institutions will not be enough to contain populism, but it is part of the answer. In addition,Europe will have to deliver better results on at least two fronts:

• First, it must better protect its citizens. And by that I certainly do not mean economic protectionism. I mean that European citizens need to feel secure – and I am talking here about security in its most simple form. Europe cannot provide all the answers to the issues raised by terrorist attacks on our soil, or the refugee crisis, but obviously Europe can provide some of them. And just as importantly, we must ensure that the benefits of globalization flow to all parts of society. We have our Pennsylvania, Wisconsin, Michigan voters in the east of France, who used to be social democratic voters and now tend to choose the National Front. They feel they are the losers of globalization. They feel that they are ignored by politicians. This cannot last forever if we want to beat populism. Europeans feel vulnerable in a globalization process that does not distribute extra points of growth fairly.
• Second, the EU must become more accessible and democratic as a response to those who falsely urge voters to “take back control" – a motto for various populists. I have discussed democratic accountability in the context of the eurozone but this is a wider issue. Transparency, exemplarity, robust parliamentary oversight procedures must be developed, whether we are legislating on the single market or on agriculture. [...]

Full speech

© European Commission