Opening remarks by Christine Lagarde, President of the ECB, at the Online Edition of The State of the Union conference organised by the European University Institute
(...) However, when it is safe to do so, Europe will have to move to the next phase of its crisis response. The focus will need to shift from providing backstop support to enabling the recovery. This will present a new set of challenges.
The ECB will play its part in line with its mandate. We will do everything necessary within our mandate to support the recovery and we remain undeterred in delivering on our price stability objective. (...)the costs of the crisis continue to rise and, as we move forward, the form of fiscal support will likely change: discretionary spending may increase, automatic stabilisers will kick in further and – in more severe scenarios – the loan guarantees supporting firms could be called. We need, as a union, to be prepared for this future. Since no one is to blame for this crisis, we must ensure that there are no undue constraints on our policy responses. Not all countries have to react in the same way. But each needs to be able to respond as necessary. Otherwise, we risk widening asymmetries and exiting this crisis with greater economic divergence.
This underscores why a common European fiscal response is so desirable.
First, it will help bridge the gap for Member States and counter that risk of divergence. Given the fiscal needs already on the horizon, it needs to be swift, sizeable and symmetrical.
Second, it will help guide us towards the Europe we want to build after the crisis. We have been given a chance to take a leap forward: to reimagine our social contract, reconsider Europe’s strategic autonomy, and recognise the risks of not taking the environment seriously. These are all areas where acting together is in our common interest.
The recovery presents a further opportunity, too: to engage citizens in the process of defining our common interest and the areas where Europe should be stronger.
In sum: this is our generation’s “Schuman moment”. We have been passed the baton of European integration. We are seeing our de facto solidarity all around us. And we are being asked to act, as those before us did, by strengthening Europe in response.
I am confident that we will recognise our historical responsibility and rise to the challenge.(...)
(...) However, when it is safe to do so, Europe will have to move to the next phase of its crisis response. The focus will need to shift from providing backstop support to enabling the recovery. This will present a new set of challenges.
The ECB will play its part in line with its mandate. We will do everything necessary within our mandate to support the recovery and we remain undeterred in delivering on our price stability objective. (...)the costs of the crisis continue to rise and, as we move forward, the form of fiscal support will likely change: discretionary spending may increase, automatic stabilisers will kick in further and – in more severe scenarios – the loan guarantees supporting firms could be called. We need, as a union, to be prepared for this future. Since no one is to blame for this crisis, we must ensure that there are no undue constraints on our policy responses. Not all countries have to react in the same way. But each needs to be able to respond as necessary. Otherwise, we risk widening asymmetries and exiting this crisis with greater economic divergence.
This underscores why a common European fiscal response is so desirable.
First, it will help bridge the gap for Member States and counter that risk of divergence. Given the fiscal needs already on the horizon, it needs to be swift, sizeable and symmetrical.
Second, it will help guide us towards the Europe we want to build after the crisis. We have been given a chance to take a leap forward: to reimagine our social contract, reconsider Europe’s strategic autonomy, and recognise the risks of not taking the environment seriously. These are all areas where acting together is in our common interest.
The recovery presents a further opportunity, too: to engage citizens in the process of defining our common interest and the areas where Europe should be stronger.
In sum: this is our generation’s “Schuman moment”. We have been passed the baton of European integration. We are seeing our de facto solidarity all around us. And we are being asked to act, as those before us did, by strengthening Europe in response.
I am confident that we will recognise our historical responsibility and rise to the challenge.(...)
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