Remarks by Paschal Donohoe following the Eurogroup meeting of 4 April 2022

 

Press material Monday 4 April 2022   ● Eurogroup   04/04/2022 22:03 | Statements and remarks | Remarks by Paschal Donohoe following the Eurogroup meeting of 4 April 2022   We are all appalled by the horrifying images of the attacks committed by the Russian army against civilians in Ukraine. We stand ready to step up sanctions and support for the people of Ukraine. It is important that we maintain our unity, that is why tomorrow at the Ecofin meeting we will discuss further actions. Today at the Eurogroup we focused on the consequences of the war on the euro area economy. We can see these clearly in energy and increasingly in food prices and the disruption of supply chains. For governments, citizens and businesses this creates uncertainty. We acknowledged that economic growth will slow down this year, but let me emphasise two points. Firstly, it is because of the risk of uncertainty that the Eurogroup stressed the need for our future trade policy to be agile and to respond to changing developments. Secondly, we entered this latest economic crisis with a strong recovery taking place within the euro area. This means that for many economies we are still looking at positive growth figures for 2022. This war is having an impact in terms of energy price increases and consequences on standards of living. We recognise the impacts on our society and cost of living in the short and in the longer term. We have highlighted the numerous policies in place to soften these impacts, particularly for the most vulnerable. In the medium term, our transition to alternative energy sources will happen much faster than we originally thought, which emphasises the pressing need to foster investments in the public and private sectors. In other areas such as food and raw materials, the war has led to price increases. The spike in prices of commodities on world markets is currently generating inflation in the euro area. As of yet, neither the Commission nor the ECB have detected signs of an inflationary spiral in the euro area. But this is something that we will be monitoring very closely. The Eurogroup acknowledged these significant costs to standing against the abhorrent actions that are now being inflicted on the people of Ukraine. The euro area has the strength to absorb these costs. Support is being provided by states to their citizens. The discussion today emphasised the value of building on the unity and coordinated action that we developed in response to the pandemic in order to effectively tackle the consequences of this war and maintain cohesion within the euro area. Our next discussion today was a very constructive exchange of views on the digital euro, in particular on issues related to privacy, and other policy objectives such as anti-money laundering. The ECB presented options for building appropriate privacy safeguards. The Eurogroup agreed that the design of a digital euro should accommodate privacy concerns while complying with the broader policy objectives and counteracting the use of digital euros for unwarranted purposes. A risk based approach could be followed to allow for more privacy in the case of less risky and smaller transactions. I also heard some support to explore a limitation of offline functionality to low value payments in close proximity. This could improve the financial inclusion objectives of the digital euro and of its convenience, potentially enhancing its overall success. We encourage the ECB and the Commission to continue with their work in this area. We'll be discussing the digital euro again in June, focusing on financial stability issues. Our third agenda item was a discussion on housing market developments and related policy implications. It is the first time we have discussed this issue in Eurogroup format, and it is part of our series of thematic discussions on issues in the euro area that are relevant to our work as finance ministers. The picture today was varied. In many economies the issue of affordability was raised with the knock-on effects on our citizens. We had a good discussion today on these challenges based on input from the Commission. We shared the different measures that are being taken at national level to respond to these challenges, while also recognising that the national specifics of housing markets vary a lot. It was also my pleasure today to welcome our new Portuguese colleague, Fernando Medina, to the Eurogroup meeting. Finally, together with our colleagues from Croatia and Bulgaria we invited the chair of the Supervisory Board of the ECB and the chair of the Single Resolution Board for the regular update on their recent activities and their assessment of the challenges facing the financial sector. They touched upon important topics such as the state of our banking system in the current geopolitical context and the recent resolution cases. These discussions showed that efforts to reduce risks in our banking systems are paying off, despite many challenges. The resilience of our banks has become an asset to our economies, as we respond back to a new test. I also took the opportunity to announce that I would be holding an extra Eurogroup meeting in inclusive format in early May. We will discuss my proposal for a work plan on banking union. We need a strong banking union to improve our competitiveness, strengthen our role in the world, and to fund the transition to a greener and more digital economy. We also need it to improve our resilience, stability, and the protection of taxpayers and depositors. I look forward to working with all the members of the Eurogroup in anticipation of that meeting