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22 February 2023

Speech by Christine Lagarde, President of the ECB, at the plenary session of the European Parliament


The expansion of the euro area and the work we must do to complete our Economic and Monetary Union.

....The euro area – an attractive club

Let me now turn to other important matters you have raised in your draft resolution: the expansion of the euro area and the work we must do to complete our Economic and Monetary Union.

On 1 January, we welcomed Croatia to the euro area – expanding our club from 19 countries to 20. Croatia’s accession is an impressive achievement, not only for Croatia itself, but also for the euro. It shows that the euro is still an attractive currency and once again reminds us that in Europe we are stronger together.

Adopting the euro will bring tangible benefits to Croatia’s four million citizens, building on the broader positive impact the euro has had over the last two decades. As an anchor of stability, the euro has advanced European integration and strengthened the Single Market’s role in driving growth. This, in turn, has elevated the EU’s standing as the world’s largest trading bloc and enhanced our autonomy on the global stage.

The euro has also become a binding symbol and integral part of our shared European identity, as its popularity shows. Support for the euro and for Economic and Monetary Union has now reached an all-time high of 80%.[2]

But with rising geopolitical tensions in the global economy[3], a stable euro will become even more important in ensuring that Europe continues to thrive. And for that to happen, we need to double down on the work that remains to complete our Economic and Monetary Union.

Here, every European policymaker needs to contribute. Let me mention three areas where progress can be made in the next 12 months before the EU elections in 2024.

First, work on strengthening euro area financial integration needs to proceed.

The ECB is playing its part, notably by ensuring European banking supervision is effective and consistent. And we promote financial integration through our central bank services, for example by supporting EU debt securities issuance to fund the Next Generation EU programme.[4]

However, the future of EU capital markets hinges on the broader regulatory environment − which is in your hands. Deeper, more integrated EU capital markets are essential for enhancing risk-sharing and mobilising the private financing needed for the green and digital transitions.

By the same token, we must not overlook the crucial work remaining for the completion of the banking union – an issue highlighted in your draft resolution and on which this Parliament has been vocal in pushing for progress.

Second, the reform of the EU economic governance framework needs to move forward.

The ECB has highlighted the importance of a simpler and more predictable framework, stronger national ownership and sustained implementation.[5] I encourage EU policymakers, including this Parliament, to rapidly reach a viable and broadly shared agreement that strengthens the foundations of our Economic and Monetary Union.

Third, an appropriate regulatory framework for the digital euro needs to be laid down.

The digital euro project is a truly European initiative which is moving ahead at a steady pace. In the autumn, the ECB’s investigation phase will come to an end and the Governing Council will decide on the next steps. But let me be clear: that does not mean that we will then issue a digital euro. That would only happen at a later stage, based on a dedicated decision, and only after the Parliament and the Council of the EU have adopted the legislative act. All EU policymakers should continue playing their part, and I am counting on this Parliament to swiftly start working on the legislative proposal which the European Commission intends to publish in a few months.

ECB



© European Parliament


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