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We have just completed our Eurogroup meeting, and I'll give you a quick summary of the key points that were discussed. We opened with a discussion on inflation and exchange rates. The key point is that inflation is coming down relatively fast. This is due to a number of different factors - energy prices coming down, supply bottlenecks easing, and the impact of monetary policy. While these are all very encouraging developments that will lead to a range of benefits being felt, we also know that we need to continue to monitor the expected reduction of inflation. If we continue on this path, we will put the most difficult phase of this economic challenge behind us. This will make life easier for companies and households, and reduce some of the complexity and trade-offs that we face as policymakers.
We then turned to our third discussion on the broad topic of competitiveness of the euro area. We discussed the drivers of trade performance in the euro area, the impact of geo-economic tensions on trade developments, and different policy avenues to address trade fragmentation. We welcomed Richard Baldwin, professor of international economics at the IMD Business School in Switzerland, who gave a superb presentation and offered his views on trade fragmentation and the appropriate policies needed to navigate the interaction between economic security and efficiency. We all shared the analysis that disturbances in global trade come from economic developments, but also from the impact of government interventions around the world. Global economic fragmentation can produce mounting economic costs, in particular for the euro area, given our openness and integration with global value chains. We recognised that a key policy priority is to continue to support an open, multilateral, rules-based trade system. We also recognised the challenges at the moment and therefore the importance of strengthening our resilience through supply chains and increasing international partnerships. We all agreed on the need to increase intra-EU trade to strengthen the single market. We agreed again on the importance of the Capital Markets Union, and discussed how we can complete the initiatives that are in front of us, and how we can continue to turn the Eurogroup’s statement on Capital Markets issued a few weeks ago into reality in the time ahead.
On the miscellaneous, we gave a mandate to our deputies to agree on a short statement on Luxembourg's updated draft budgetary plan after the Commission publishes its opinion next week.
We then engaged in a discussion on the digital euro together with our EU colleagues from outside the euro area. In this discussion, we took stock of recent progress. Since our last discussion, the ECB entered in November into a preparation phase. This phase will take two years. It will focus on a common rulebook and all the necessary technical preparations to be ready for roll-out if and when the decision comes to introduce a digital euro. In parallel, deliberations between co-legislators are advancing on the legal framework. The Eurogroup will continue its political engagement on this topic to provide complementary, political and strategic direction on this important common European project. We continue to take stock of this work, and will be returning back to this in the Eurogroup shortly.