Members of the EP Committee on Economic and Monetary Affairs (ECON) hold their second Economic Dialogue and exchange of views with Paschal DONOHOE, President of the Eurogroup. The exchange of views covers the ongoing work of the Eurogroup, notably short term policy measures intended to combat the economic, financial and social consequences of COVID-19, medium term policies to support a sustainable recovery and increase resilience of the euro area and longer term measures relating to the EMU governance framework, including completing the Banking Union. This transcription speech is the result of an automatic process. Check against delivery.

Brussels

exchange of views

statement

meeting

Committee on Economic and Monetary Affairs

Eurozone (T)

economic dialogue (T)

TINAGLI, Irene (S&D, IT)

DONOHOE, Paschal (IE)

Economic dialogue with Paschal DONOHOE, President of the Eurogroup: opening statement - ECON Committee

SOUNDBITE (English), Irene TINAGLI (S&amp;D, IT), Chair, We resumed our session, very intense session today with our Economic Dialogue and I welcome Paschal Donohoe, president of the Eurogroup for his second economic dialogue with the members of the ECON committee. The first dialogue with the Eurogroup president took place on 25th of January 2021. This afternoon, also, the economic dialogue with the Eurogroup president starts directly after the monitoring dialogue, just held by equal members with ECB President Lagarde. President Donohoe, we were very pleased to read in your motivational letter as candidate for the Eurogroup president that and I quote you effectively communicating to our citizens and to the European Parliament and the steps we are taking in the Euro area will be the priority of my firm.

SOUNDBITE (English), Irene TINAGLI (S&amp;D, IT), Chair, So I would like to take this opportunity to reiterate ECON's request for enhanced cooperation with yourself, with the Eurogroup, and invite you to put forward how you would like to follow up on these, due to the key role of the Eurogroup in steering the policy work of the Euro area as a whole. We would like to stress the importance of the well established cooperation process with the European Parliament, notably our committee. One way would be to go in the direction of the practise that we have for the monetary dialogue with ECB president, which has been working very nicely in enhancing our cooperation. In these very challenging times, the Eurogroup is indeed at a key position. So I therefore I think that the need for transparency and accountability is particularly important for us.

SOUNDBITE (English), Irene TINAGLI (S&amp;D, IT), Chair, Today's exchange of views will reflect the very different topics covering the ongoing work of the Eurogroup, notably short term policy measures intended to combat the economic, financial and social consequences of covid-19, medium-term policies to support a sustainable recovery and increase resilience of the Euro area and longer-term measures relating to EMU Governance Framework, including the completion of the banking union. We are now very much looking forward to hearing you. We have been informed that you will not be answering any questions that are not related to your role as Eurogroup president and or outside the Eurogroup remit signed for all our colleagues also about that.

SOUNDBITE (English), Irene TINAGLI (S&amp;D, IT), Chair, In line with agreed practises, the following procedure would be applied for this exchange of views with the president of the of the Eurogroup. So there will be introductory remarks by Mr. Donahoe for about ten minutes, followed by a five minute question and answer slots with the possibility of a follow up question, time permitting, within the same slot, two minutes maximum for the question and three minutes maximum for the answer. In the first round of questions, each political group will have one slot. Thereafter, we will apply the don't system, which determines the order of questions by political groups and each time so allows additionals slots will be allocated on a catch the eye basis.

SOUNDBITE (English), Irene TINAGLI (S&amp;D, IT), Chair, So I really ask to all of my colleagues to strictly respect the time given to you, especially because Mr. Donahoe has an important commitment at seven fifteen. So please, let's keep the time and last point on interpretation. Interpretation is expected to be available until 6.45 p.m. and from then on the proceedings will continue in English only. So I will open the debate now. President, Donohoe I really thank you again for your availability and being with us today.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, Good evening, everybody. Madam Chair, honourable members of the European Parliament and ladies and gentlemen, thank you for inviting me to another economic dialogue. And I'll certainly reflect on what the chair just said there regarding how we can structure our dialogue in the future. Let me cut to the main issues of the Eurogroup and our work over the last few months and our priorities as we go forward. Since we last met, the economic outlook for the euro area has markedly improved recent forecasts of international institutions, including the European Commission spring forecast for a strong rebound of economic activity in 2021 and the recovery in 2022 available indicators for the second quarter suggest that a recovery is indeed underway.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, The role of vaccines to progressive easing of restrictions, continued fiscal support, pent up demand and strengthening global demand are the key drivers of growth. This is very good news. However, the economic outlook is still surrounded by considerable uncertainty. The recovery remains predicated on a continued positive evolution of the health situation. There are still many risks, notably related to variants. This means we need to update our analysis regularly, be agile in our response. That is what the Euro Group has been and will do. A coordinated response to an unprecedented crisis is essential. We have a shared interest that all euro area member states provide the right level of public policy support and coordination has been the central theme of our economic policy response, and it will remain crucial to address the risks of widening divergences within our monetary union.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, We are determined to see this true as we transition out of the crisis and into a firm recovery. So let me say a word about our fiscal response. We regularly monitor the economic situation and come to a common understanding and fiscal policy. Of course, the assessement of our commission and our central bank are critical to this. In March, we had an in-depth discussion and unanimously agreed that we should avoid any premature withdrawl of fiscal support. We are committed to delivery a supportive fiscal stands this year and next. This is the right course of action. We are cognisant of the uneven impact of the pandemic on our economies and we need to avoid long term scarring. We agreed our fiscal stance should remain agile. In other words, we will provide our economies with the right level of fiscal support. True, temporary and timely measures.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, These measures should be increasingly targeted as we promote a sustainable recovery. So this could mean that we gradually move from broad based income and liquidity support for workers and businesses to more targeted measures. Public funding should also be increasingly directed to reforms and investment, notably in the green and digital transition. This approach strikes the right balance between supporting our economy and safeguarding debt sustainability, and it's consistent with the broad international consensus into topic as reflected in the recent statement at the G7. It's also in line with the fiscal guidance that the commission outlined in its spring package, where it confirmed that the escape clause would remain active next year, at which point all euro area economies should have returned to crisis output levels. Credible medium term fiscal strategies will also help anchor our commitment to fiscal sustainability and installing confidence.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, In short, the Eurogroup will continue coordinating national fiscal policies in order to deliver along with Next-Generation EU, the right budgetary stance for the Euro area. This should, of course, allow for differentiation across member states taking into account available budgetary resources and country specific circumstances. Fiscal policy is one part of the policy mix. Structural policies are another one, and this requires close coordination. Member states have been working hard to present high quality Recovery and Resilience plans, and these plans should be consistent with the Euro area policy recommendations. And the Eurogroup is the right forum to encourage countries to reflect the euro area dimension in their implementation.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, This is critical. We've discussed the structural impact of the pandemic on a number of occasions. We know the risk of increasing inequality and widening divergence. At the same time, the structural impact of the pandemic drives the need to modernise our economies to make them more resilient. For example, by accelerating the green and digital transition. This will require a coordinated policy action on several fronts. We also need to, in the right way, recognise that some companies, some employers over time may become inviable. The Eurogroup is looking at ways to enhance and promote convergence of national insolvency frameworks. While functioning frameworks in this area are critical to safeguard the financial sector's ability to provide credit to the economy and to promote reallocation of resources and by doing so, create more work and more employment elsewhere.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, This leads me to the work of the Eurogroup on strengthening the EMU institutional architecture following our agreement in November, last year, including the role of the ESM and SRF, much of our focus was on how we complete banking union. We were invited to do this work by the Euro Summit in 2020. We've done a lot over six months. We've managed to narrow down differences on key issues and we've developed a deeper understanding of the still open markets. That said, this is technical and it is deeply important and sensitive. Inter linkages between different elements exist. It is a difficult balancing act. And while we've made progress, we haven't made enough yet to deliver a credible and ambitious and effective work plan. At the same time, everyone recognises the importance of completing banking union.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, This means we're going to keep at it for months to come and we return to the subject a little later in the year. The aim is to present a comprehensive and ambitious work plan to guide our work going forward and to deliver concrete progress on key parts within this institutional cycle. I'm confident that we will do thus. Just concluding another matters compared toughness and strategic autonomy also requires us to stay on top of financial innovations. In this regard, the issue of digital central bank currencies is an important development. We're monitoring the ongoing work on a possible digital euro that is initiated by the ECB. The strong support amongst member states for this project, this twas confirmed by leaders at the March Euro Summit. We look forward to the decision that the ECB will make about technical and preparatory work to intern bodies in a decision to decide on the future of the digital euro in the near future.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, This not only has significant monetary and financial implications, but also an important political and societal impact. That's why Euro Group tends to be actively involved in the project and to regularly revert to the topic. We have full respect with of the independence and mandate of all of our European institution. And this project does indeed need to be a collaborative effort. So this brings me to the end of my remarks. The tone has been great to have, as we know, has been so intense for lives and livelihoods. But in the spirit of solidarity, we have achieved much. We have a lot ahead of us.

SOUNDBITE (English), Paschal DONOHOE, President of the Eurogroup, But I'm confident that with the same levels of coordination and solidarity, we will turn a rebound into a solid and inclusive recovery. That's something I'm really committed to. It's our common goal. And I want to assure the committee that the Eurogroup is fully committed. In this endeavour. Our common currency, the euro, will more than ever serve as an anchor of stability and confidence, not just in Europe, but also, I believe, in time across the world. Thank you for your attention and I look forward to your questions.