We had a very good set of discussions on different topics today in the Eurogroup meeting. We started by taking stock of the macroeconomic and budget developments in the euro area with the managing director of the IMF. This discussion was a very timely reminder of the resilience of the euro area, considering the shocks we have experienced in the last few years. But we still face a very careful balancing act to foster growth, to bring down borrowing and debt, and to ensure that we have financial stability in place while responding back to common challenges. We’ll come back to the budget situation in our July meeting, when we will issue our regular statement on euro area budgetary policy.
We then continued our meeting, with a discussion on the euro as an international currency. The ECB informed us that despite a difficult geopolitical context last year, the euro remains resilient and broadly stable in 2023 and continues to be the second most important international currency behind the dollar. Nonetheless, we’re also aware of the challenges created by the current geopolitical context, and we need to continue to monitor risks to the international role of the euro, such as the rise of alternative reserve assets and the increasing fragmentation in the global payment system. There are a number of steps we can take to continue to preserve the international role of the euro and to strengthen it in the future. Sound economic policies in the euro area and a deeper Economic and Monetary Union are on the top of the list. How we progress in the Banking Union and Capital Markets Union, alongside improvements in cross-border payment systems between the euro and other currencies, are also important.
We then turned to our meeting in inclusive format with all EU finance ministers present. We had our fifth discussion under this workstream on competitiveness – this time with a focus on the role of industrial policy. The IMF, as well as the Commission provided some really helpful insights for our discussion. We noted that recent trends show a resurgence of industrial policy worldwide. The reasons are multiple: attempts to secure presence in digital industry, efforts to decarbonise the economy and efforts to increase competitive advantage and reduce dependencies in the context of increased geopolitical tensions. The Eurogroup reflected on the potential roles for industrial policy in Europe, noticing the different national specifics of our economies. But all ministers emphasised the value, the role of the single market, the need to protect it, and the need to find ways to grow it. And there was wide agreement on this being one of our greatest achievements and on how we need to look after it with care.
We did acknowledge that there can be situations in which carefully designed industrial policies can play a useful role, but these tend to be where market failures are present, where ‘first-best’ solutions are not available, or more positively, where we are trying to identify and deliver pan European public goods. So industrial policy in those areas may not be particularly useful for raising productivity and our growth potential, but it may be useful to longer-term objectives of a green transition, energy security and supply chain resilience. At the same time, as is frequently the case, adopting carefully designed policies is not as easy as it sounds. And many ministers were aware of this. So there was a lot of emphasis on support of frameworks for conditions for businesses to preserve the level playing field within the single market.
I ended the meeting with a quick summary of my work representing the euro area at the G7 Finance Ministers level.
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