Remarks by Paschal Donohoe following the Eurogroup meeting of 12 July 2021

(Source: Eurogroup)

Our Eurogroup meeting today took place as economic prospects across the euro area are starting to brighten after many months of efforts in terms of vaccination and other efforts to protect public health. EU policies and coordination have been instrumental in preserving jobs during the lockdown, and we will have tomorrow a first set of 12 Council implementing decisions on national recovery and resilience plans. This is a really important moment in European solidarity, and it symbolises our determination to achieve more together than we could have individually in the face of the pandemic. With this said, we continue to monitor the Delta variant.

This was therefore an ideal moment to welcome a very special guest to the Eurogroup. We started our meeting today in the presence of the US Treasury Secretary Janet Yellen. The United States and Europe have long been key pillars in global economic governance, and although it was a coincidence in timing, it was nonetheless particularly good to welcome Secretary Yellen on the day marking the seventy-fourth anniversary of the Conference on European Economic Cooperation, which began this day in 1947 and was a catalyst to many of the events and moments that lead us here today. It is a timely reminder of the long and deep friendship and cooperation between Europe and the United States. We were very lucky to benefit from Secretary Yellen’s insights on a very wide range of issues. We had a really broad and rich discussion. We addressed the challenges currently facing the global economy, starting, of course, with our fight against COVID-19. We discussed how this disease is affecting our businesses and our workers on both sides of the Atlantic, and we discussed how our agendas can be fully aligned as we address this crisis.

We continued the inclusive part of our meeting with a follow up to the June Euro Summit, which invited us to continue our work on Banking Union without delay and to report back in December. As I mentioned after the June Eurogroup, this will continue to be an important priority for us in the second half of the year.

At this point, we switched to the regular Eurogroup, where we started with an important discussion on the overall budgetary stance of the euro area. Our policy up to this point has been very supportive and that is projected to continue into 2022. This was confirmed as the right strategy by the European Fiscal Board. Its chair, Professor Niels Thygesen, presented a recent report and we had a good exchange of views. Our discussion today showed that ministers and institutions remain in agreement that a supportive fiscal stance is appropriate in the euro area as a whole in the coming year, and that the planned fiscal support seems sufficient at the current juncture. A gradual shift in the focus of measures from emergency to recovery support is underway, and we will need to maintain policy agility going forward. The messages that we outlined in our March fiscal policy statement are still ones that we are committed to and they remain valid. Of course, there are important policy challenges ahead. The key issue for the euro area will be how we adjust our budgetary policy as we continue in our efforts to beat the pandemic. But on this today, we only had a preliminary reflection, and it’s a matter we’ll need to come back to after the summer.

After this, we came back to the topic of the digital euro. Given the very important political dimensions of this project, it’s important that in the months ahead, the Eurogroup considers the design of the digital euro. We’ve identified a number of topics on which the Eurogroup will be making contributions over the next number of months. Of course, given the complexity of these issues, will be working closely with our colleagues in the ECB and the Commission.

We will start by discussing the policy objectives and uses of a digital euro in the global competitive context, taking into account broader initiatives at the international level. This will help us to clearly define a general objective for a digital euro and how it could be used.

We will then move on to a targeted discussion on privacy considerations and how they square with other policy objectives, such as countering theft clamping down on illicit financing.

Based on these two discussions, we will then turn to potential impacts of the digital euro on the financial system and the use of cash.

Then finally, we will discuss the broader ecosystem around the digital euro and the role of some business models of the various public and private actors, which in turn could have implications for efficiency, competition, innovation and the inclusiveness of the digital euro.

We’ll have a clearer idea of the schedule for these discussions after the European Central Bank Governing Council makes their decision in relation to an investigation phase.

So let me then finally conclude by mentioning that at the end of our meeting, President Lagarde presented the outcome of the ECB’s recently concluded strategy review.

So a very broad meeting covering a lot of subjects, setting the scene for a very positive ECOFIN meeting, which will be taking place tomorrow morning.

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