Remarks by Paschal Donohoe following the Eurogroup meeting of 13 March 2023

We had a series of good discussions. We began by welcoming our new colleague from Cyprus, Minister Makis Keravnos, who updated us on the priorities of the new Cypriot government.

We then moved on to a discussion on fiscal strategy for 2024, in light of the economic situation and the guidance in last week’s communication from the Commission. You all have seen that we adopted a statement reflecting our strategic view on fiscal guidance for next year. This has become a key element of policy coordination in the Eurogroup as we discuss budgetary preparations and is an important ingredient into our national work.

We agreed that fiscal policies should aim to ensure debt sustainability in the medium term while raising growth potential in a sustainable manner. We did recognise the need to address the green and digital transitions, but sent out important signals regarding the design of budgetary measures and the need to avoid permanent deficit increasing measures as an important element in preparation for budgets for next year.

The discussion also saw broad recognition that there are two distinct issues: first, the agreement of our Eurogroup statement that was just published, and second, the discussion on changes to the economic governance framework, which is well underway.

Our second item today was the preparation for international meetings. Commissioner Gentiloni debriefed us on the February G7 meeting of finance ministers and central bank governors, and we looked ahead to the April spring meetings that will take place in Washington. More than ever, it is important for us to have a common understanding of the key issues for the euro area as we participate in policy discussions with policymakers from all around the world. And there continues to be full consensus within the Eurogroup on exchange rate developments.

We then moved on to a discussion on inflation. This topic is never absent from our policy discussions, and today was an opportunity to take a deeper dive into the inflation figures, to look at the Commission’s analysis, to take stock of a range of price pressures that are lingering even after energy prices have come down from their peak levels; and it also provided a further political opportunity for ministers to share their experiences in dealing with this great challenge and also to further develop best practice.

We then had a short discussion on the euro area specific elements of the economic governance review, notably with regard to draft budgetary plans and macroeconomic imbalances. It was a short discussion because we reached consensus on those particular elements and the ECOFIN Council conclusions tomorrow will contain a paragraph reflecting our common view.

We then concluded our planned agenda items with a strategic discussion on the digital euro. This built on the statement we adopted in January and after many months of assessing the potential design of a digital euro ministers wanted to reflect on the bigger picture again ahead of a legislative proposal from the Commission and the ECB decision on whether to move to the next phase.

We noted the reasons why the digital euro is a high priority for our monetary union. These issues involve matters such as consumer preferences, providing a public good in the form of pan-European payment solutions and how we can preserve and deepen European monetary and economic autonomy. We also confirmed that we will continue our work to provide a solid democratic and political basis for that project, and we touched upon some of the implications of granting legal tender status to the digital euro.

Finally, we discussed the collapse of the Silicon Valley Bank in the United States, a situation that we continue to monitor carefully. The problems arise from the specific business model of the Silicon Valley Bank, and the picture here in Europe is very different. Our banks are overall in good shape. We have strengthened them enormously in recent years, and they are under the close supervision of national and European authorities, and the Basel framework is being applied to all EU banks.

There is no direct exposure, therefore, to Silicon Valley Bank, but this is a reminder to us that shocks to the banking system can emerge at any time, how important it is to ensure the resilience of our banking system and how important, of course, it is to continue with our efforts to strengthen Banking Union.