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Completing Economic and Monetary Union



Completing Economic and Monetary Union 3

Speech by Jean-Claude Trichet, President of the ECB,
at the Gala Dinner of the State of the European Union conference
“Revitalising the European Dream: A Corporate View”

Ladies and gentlemen,
Thank you for inviting me to this conference. The theme to which it is dedicated is especially relevant today, when we have to draw all the lessons from the worst financial crisis since World War II.
These days, “Europe” and the benefits it brings have come to be taken for granted. Thanks to the success of European integration, the threat of war has become a memory of the past for many Europeans, in particular the younger generation.Completing Economic and Monetary Union 4
This makes it all the more urgent to develop a renewed vision of the kind of Europe we want and indeed need – a vision that is easily understood and shared amongst EU citizens.
Each generation needs to affirm its commitment to Europe.
As Pierre Werner once observed, “it is necessary that even those born well after the 1950s and 1960s realise that the European Union has not come about by chance, but that it is based on the fundamental necessities of life amongst the peoples of Europe” [1].
Thankfully, these “fundamental necessities of life” – especially in the economic sphere – still seem to be felt and understood by the people in Europe. When asked, in the Eurobarometer surveys, which issues the European institutions should focus on in the coming years, Europeans believe that priority should be given to economic and monetary policy (37% in the EU and 41% in the euro area).
More than three out of four Europeans (78%) agree that measures to reduce the public deficit and debt in their country cannot be delayed.
More than three quarters of respondents (77%) consider that stronger coordination of economic and financial policies, as well as closer supervision of financial institutions would be effective in combating the crisis. The idea of initiating reforms to benefit future generations attracts equally strong support.

Revitalising Europe
Revitalising Europe means bringing the reality of today’s Europe, of its institutions and policies, closer to these wishes and concerns of the EU citizens.
A Europe of stability and responsibility where the burdens of today’s adjustments are not shifted onto future generations.
An open and flexible Europe fostering education, entrepreneurship and innovation, with ample employment opportunities and a high standard of living.
A Europe that fully brings its economic and political weight to bear in an ever more globalised economy.
There is a good basis for all of this – we can indeed take pride in our past achievements.
Having served as a member of the Governing Council of the ECB since the launch of the euro and as its President for almost eight years now, let me say that we have accomplished a lot:
For example, companies in the euro area do not have to worry about price stability – I will come back later on this issue – and possible devaluations in the countries of their main trading partners. They face lower transaction and hedging costs. There is more price transparency and more ample access to finance, in general.
Since the start of the euro, employment in the euro area has risen by over 14 million, compared with about 8 million in the United States. Adjusted for population growth differences, growth per capita in the euro area has been almost the same as in the United States over the past decade, at about 1% per year in terms of GDP per capita growth.
Trade among euro area countries has also risen strongly. The value of exports and imports of goods within the euro area increased from about one quarter of GDP in 1998 to one third of GDP in 2007, with trade within euro area countries representing about a half of the total euro area trade.

Economic and Monetary Union
The key to understanding the current challenges in the euro area is the specific construction of Economic and Monetary Union.
The coexistence of an achieved monetary union – the single currency, the single monetary policy and the Eurosystem with the ECB at its helm – and of a largely decentralised economic pillar.
Indeed, Member States are responsible for their fiscal and economic policies, but are called to treat them as a matter of common concern. Those policies are subject to a European governance framework to ensure that they are fully compatible with the requirements of a single currency.
Our governance framework largely relied on the self-discipline of national governments, with hard constraints at the EU level only in those few cases where hard rules were supposed to apply.
We had assumed that countries had sufficient incentives to ‘keep their house in order’ and thereby contribute to the common good of the euro area. An overly narrow interpretation of the principle of subsidiarity also shielded national economic policies from what was seen as undue European interference.
The experience of the first twelve years of EMU suggests that the limits of de facto soft policy coordination have largely been exhausted, with the interdependencies inside a monetary union calling for a stronger euro area dimension.
Let me now take a closer look at the two EMU pillars separately.

The ‘M’ of the EMU
The ‘M’ of the EMU, or the monetary pillar, has performed well.
The ECB has a clear assignment: to deliver price stability, which is defined as an annual inflation rate below but close to 2% over the medium term. And over the 12 years since the launch of EMU, the average annual inflation rate in the euro area has been 1.97%.
This is the best result of a major central bank in the euro area for any such period of 12 years, over the last 50 years.
We achieved this during challenging times. Over the years, we have had to cope with the bursting of the dot-com bubble, the aftermath of the events of 11September 2001, the jump in oil prices to $147 per barrel in 2008, rising prices of food and commodities, and then of course the worst financial and economic crisis since the Great Depression.
Yet throughout these very different economic shocks – which could have had either inflationary or deflationary consequences – citizens and market participants in the euro area have remained confident in our commitment. Inflation expectations have been firmly anchored in line with our definition of price stability.

The ‘E’ of the EMU
It is the ‘E’ of the EMU, where progress is needed.
Already the 1989 Delors report stated that “an Economic and Monetary Union could only operate on the basis of mutually consistent and sound behaviour by governments and other economic agents in all member countries. (…) Uncoordinated and divergent national budgetary policies would undermine monetary stability and generate imbalances in the real and financial sectors of the community.”
What does this mean in practice?
It means improving economic governance.
It means strengthening the rules to prevent unsound policies.
And it means to prohibit individual countries from pursuing policies that can harm themselves and the euro area as a whole.
For this reason, I have called, in the name of the Governing Council, on the Commission, the Council and the European Parliament to be very ambitious in reinforcing economic governance in the euro area.
We have called for a “quantum leap” in governance, for a substantially deepened economic union.

Essential reforms
In the short-term, we have to tackle the most urgent issues by implementing the structural adjustment programmes that are currently underway.
The new economic governance framework that is currently being negotiated needs to be agreed and implemented in full and without delay.
We must get the institutional framework for the medium-term right.
The two EU co-legislators and the Commission have been negotiating the new economic governance package during the preceding weeks.
The European Parliament has confirmed its position at last Thursday’s plenary vote. The ECB particularly welcomes the strong message that is sent as regards the fact that the Stability and Growth Pact’s procedures have to be made more automatic. Our past experience in applying the Pact, especially after weakening of its core provisions in 2005, have amply demonstrated that a reform of these procedures has to be a sine qua non of a determined response to the current crisis.
In this context, the Governing Council of the ECB regrets that the European Council did not decide to espouse the European Parliament’s views on this issue at the end of last week. This is an issue of key importance for the ECB. We consider that an essential progress in decision-making procedures in the Council is to make them more automatic.
The extension of reverse qualified majority voting to the preventive arm of the Pact, which the European Parliament rightly insists on, is not about a perceived loss of sovereignty. It is a mechanism that would allow all Member States to protect themselves better from the harmful effects of unsound fiscal policies.
Since the very beginning of the discussions on the reform of economic governance in May 2010, the ECB has asked for greater automatism in the decision-making procedures to limit the room for discretion. This is a major component of the ‘quantum leap’ that we have called for.
Had the Council had less room for manoeuvre in suspending or halting fiscal surveillance procedures in the years preceding the crisis, some of the euro area countries would not be facing as severe a sovereign debt crisis today.
However, this was not the entire story – surveillance instruments were lacking altogether as regards the build-up of competitiveness losses and of macroeconomic imbalances, which have made any solution to fiscal problems even more challenging.
Therefore, the ECB has also called for a fully-fledged surveillance procedure for competitiveness indicators and for macroeconomic imbalances. As a matter of fact, we have been pointing to the risks associated with competitiveness losses since 2005 and insisting on peer review and mutual oversight. The new procedure needs to be focused on the countries with large competitiveness losses and high indebtedness, since it is those countries that pose a potential threat to the functioning of EMU.
In the short term, all parties have to take their responsibilities and agree on an ambitious governance package with two pillars – surveillance of fiscal policies and surveillance of macroeconomic policies, sending out a clear message to strengthen the economic policy framework that has been dented during the crisis. We urge a swift and ambitious completion of the legislative procedure to bring about certainty on this new framework.
An additional element of stronger economic policy coordination for competitiveness and convergence surveillance in the euro area is the newly agreed Euro Plus Pact. The ECB supports the four goals of this Pact, namely to foster competitiveness and employment, to contribute to the sustainability of public finances and to reinforce financial stability.
But we have also insisted that the Euro Plus Pact must be more than declarations. It must be followed up with concrete action. The ECB therefore welcomes the fact that the European Council last week called on the participating Member States to make their reform commitments more concrete, including specific timelines, to enable easier measurement of progress and benchmarking.

Single Market
Furthermore, let us not forget that the euro area of the 17 countries is participating actively in the larger Single Market of the 27 member countries of the European Union.
The Single Market forms an integral part of the wider Europe 2020 strategy for smart, sustainable and inclusive growth. The governance framework of this strategy underpins the wider surveillance efforts of the economic pillar of EMU. The first experience as part of the so-called European Semester is approaching its final stages, with the European Council’s endorsement of the proposed recommendations for individual Member States last week.
The EU Single market offers a unique businesses environment with direct access to over 500 million potential business partners, employees and consumers with relatively high purchasing power. The Single Market has not been at the centre of the EU political priorities for quite some time and there have even been protectionist tendencies.
I, therefore, strongly support the initiatives aimed at re-launching the Single Market to address the prevailing structural challenges faced by the EU economy. The Single Market is at the core of the Union’s growth agenda. A widening and deepening of the Single Market should be viewed as an opportunity to raise the “speed limit” of the economy, which is highly warranted in the aftermath of the impact the financial crisis had on the European economy.
Moreover, completion of the Single Market is an essential ingredient of the required quantum leap towards a deeper economic union that is commensurate with the degree of economic integration and interdependency already achieved through monetary union. EMU has led to a strengthening of trade integration and competition within the Single Market by enhancing market access, reducing the costs of cross-border activities and increasing price transparency.
At the same time, a well-functioning Single Market is pivotal for the smooth functioning of EMU. It allows for swift and market-based adjustment in case of shocks and facilitates the correction of economic imbalances.
A well functioning Single Market also requires proper design and implementation of financial sector policies. In this respect, the establishment of a new EU supervisory architecture to introduce genuine macro-prudential supervision and to strengthen the micro-prudential oversight at the EU level was a prerequisite for enhanced financial stability arrangements.
The establishment of the European Systemic Risk Board and the European Supervisory Authorities is an important milestone in providing the appropriate incentives to avoid excessive risk taking in the financial sector and to promote a level playing field in support of beneficial financial integration within the monetary union. Establishment of an EU framework for crisis management is an important complementary element of the new supervisory framework that still needs to be put in place.

This is a large agenda already. What more would be needed for EMU in the longer term?
I have sketched out in my speech in Aachen earlier this month some elements that in my view would warrant consideration in the design of a longer-term vision for Europe.
Developing these elements in more detail would, however, be the topic of another speech.
Ladies and Gentlemen,
I thank you for your attention.

[1]« Il est nécessaire que même ceux qui sont nés bien après les années 50 et 60 se rendent compte que l’Union européenne n’est pas un coup du hasard, qu’elle se fonde sur des nécessités fondamentales de la vie entre les peuples de l’Europe » (On 11 December 1997, on the eve of the Luxembourg European Council).
Copyright © for the entire content of this website: European Central Bank, Frankfurt am Main, Germany.

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U.S. inauguration turns poet Amanda Gorman into best seller



U.S. inauguration turns poet Amanda Gorman into best seller 5

WASHINGTON (Thomson Reuters Foundation) – The president’s poet woke up a superstar on Thursday, after a powerful reading at the U.S. inauguration catapulted 22-year-old Amanda Gorman to the top of Amazon’s best-seller list.

Hours after Gorman’s electric performance at the swearing-in of President Joe Biden and Vice President Kamala Harris, her two books – neither out yet – topped’s sales list.

“I AM ON THE FLOOR MY BOOKS ARE #1 & #2 ON AMAZON AFTER 1 DAY!” Gorman, a Los Angeles resident, wrote on Twitter.

Gorman’s debut poetry collection ‘The Hill We Climb’ won top spot in the online retail giant’s sale charts, closely followed by her upcoming ‘Change Sings: A Children’s Anthem’.

While poetry’s popularity is on the up, it remains a niche market and the overnight adulation clearly caught Gorman short.

“Thank you so much to everyone for supporting me and my words. As Yeats put it: ‘For words alone are certain good: Sing, then’.”

Gorman, the youngest poet in U.S. history to mark the transition of presidential power, offered a hopeful vision for a deeply divided country in Wednesday’s rendition.

“Being American is more than a pride we inherit. It’s the past we step into and how we repair it,” Gorman said on the steps of the U.S. Capitol two weeks after a mob laid siege and following a year of global protests for racial justice.

“We will not march back to what was. We move to what shall be, a country that is bruised, but whole. Benevolent, but bold. Fierce and free.”

The performance stirred instant acclaim, with praise from across the country and political spectrum, from the Republican-backing Lincoln Project to former President Barack Obama.

“Wasn’t @TheAmandaGorman’s poem just stunning? She’s promised to run for president in 2036 and I for one can’t wait,” tweeted former presidential candidate Hillary Clinton.

A graduate of Harvard University, Gorman says she overcame a speech impediment in her youth and became the first U.S. National Youth Poet Laureate in 2017.

She has now joined the ranks of august inaugural poets such as Robert Frost and Maya Angelou.

Her social media reach boomed, with her tens of thousands of followers ballooning into a Twitter fan base of a million-plus.

“I have never been prouder to see another young woman rise! Brava Brava, @TheAmandaGorman! Maya Angelou is cheering—and so am I,” tweeted TV host Oprah Winfrey.

Gorman’s books are both due out in September.

Third on Amazon’s best selling list was another picture book linked to politics and projecting hope: ‘Ambitious Girl’ by Vice-President Kamala Harris’ niece, Meena Harris.

(Reporting by Umberto Bacchi @UmbertoBacchi, Editing by Lyndsay Griffiths. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit

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Why brands harnessing the power of digital are winning in this evolving business landscape



Why brands harnessing the power of digital are winning in this evolving business landscape 6

By Justin Pike, Founder and Chairman, MYPINPAD

Delivery of intuitive, secure, personalised, and frictionless user experiences has long been table stakes in digital commerce, well before the era of COVID-19. As businesses harness the revolutionary power of digital technologies, they have pursued large-scale change to adapt to evolving consumer preferences (some more successfully than others, but that’s a blog for another day). Digital transformation is a term we hear repeatedly, and it looks different for each organisation, but essentially, it’s about utilising technology and data to digitise, automate, innovate and improve processes and the customer experience across the entire business.

As I said, this was already well underway but then came 2020 and no industry escaped the disruption of the coronavirus outbreak, which has had an indelible impact on businesses performance, operations, and revenue. Regardless of whether the impact of COVID has been very positive or very challenging, it has forced organisations globally to re-evaluate and re-orient strategies to adapt.

As lockdowns and pandemic-related restrictions continue to change daily life, this raises the question of how we can balance a dramatic shift to digital and the benefits it brings, while ensuring business continuity and innovation both during and post-COVID, and protecting everyone against fraud?

Digital is an essential survival tool, and even more so in a COVID world

No one could have predicted the dramatic digital pivot that has taken place over this year. Indeed, within weeks of the COVID outbreak cash usage in the UK dropped by around 50%. Digital solutions including delivery applications, contactless payments, mobile commerce, online and mobile banking have become essential components of a touchless customer experience in the era of social distancing. It’s no longer just about an enhanced and superior customer experience, it’s also about health, safety and survival.

In store, businesses have benefited from contactless payments enabling faster throughput and reduced need for consumers to touch payment terminals (therefore requiring greater cleaning, which degrades the hardware much faster). Mastercard reported a 40% increase in contactless payments – including tap-to-pay and mobile pay – during the first quarter of the year as the global pandemic worsened. Digital has also become an essential sales channel for many B2C brands. Where brick and mortar stores have been required to close, digital commerce enables continuity of customer relationships and revenue. This channel also provides brands with rich customer data, which can be used to enhance and personalise the customer experience and typically results in greater levels of engagement and uplifts in revenue.

Industry forecasts estimate that worldwide spending on the technologies and services enabling digital transformation will reach GBP 1.8 trillion in 2023 – a clear indication that the process represents a long-term investment and a global commitment to digital-first strategy. The key point here is that digital brings significant benefits, and regardless of COVID, is here to stay.

The challenges that rapid digital transformation brings to businesses

Justin Pike

Justin Pike

Regardless of whether businesses are operating in developed or less-developed economies, these times of crisis have levelled the playing field in the sense that all businesses are facing similar issues. Access to products and supplies, maintaining customer relationships, accelerating sales for some and declining sales for others, health and hygiene are just a few of the unique challenges brought about by COVID.

Many businesses in physical environments have had to swiftly implement changes to significantly reduce safety risks for staff and customers, such as contactless payments, mobile ordering and delivery options. But with these changes come a host of other benefits of digitisation, such as faster transactions, and reduced human error at the point-of-sale.

The reliance on technology, however, can also expose organisations and consumers to certain vulnerabilities. In particular, the risks of fraud and cybercrime have dramatically increased since the onset of the pandemic as scammers have taken advantage of digital technologies to target both businesses and individuals.

As a McKinsey report illustrates, new levels of sophistication in the activities of fraudsters have placed more pressure on companies that have been previously slow to go digital, bringing “into sharp relief how vulnerable companies really are”, and damaging the financial health of small and large businesses. In fact, the Bottomline 2020 Business Payments Barometer reveals that only one in 10 small businesses across the UK report recovering more than 50% of losses due to fraud.

But take these stats with a grain of salt. While it is important to be aware of the risks and challenges this new business landscape brings, it’s equally as important to have a lens firmly across your own business, industry and audience, and to identify the changes you can make internally to mitigate risk as well as improve your customer experience. Where can you make some quick wins? Do you have the right skillsets internally to achieve what you need to achieve? What technology is out there that will enable your business goals? There are tech companies like MYPINPAD that are making huge strides in software development, which will transform businesses globally.

A digital world post-COVID

Almost a year in, the line between business success and failure remains fragile. However, an ongoing transition towards greater digitisation will be the difference between survival and the alternative.

There is a wide range of initiatives businesses can implement to weather this storm. If we look at the space MYPINPAD operates within, secure digital consumer authentication is crucial to the ongoing success and security of not only financial products but also identification and verification across a range of different industry verticals. Shifting the authentication of consumers securely onto mobile devices enables businesses to completely reshape their customer experiences. By bringing together a more seamless, frictionless customer experience, accessibility, privacy, security and access to consumer data, businesses are able to drive digital transformation across day-to-day activities.

Against this backdrop, software with stronger security standards continue to play an ever more vital role in supporting society, protecting consumers and businesses from the increase in risks that rapid digitisation brings. Already, merchants can deploy PIN on Mobile technology from companies like MYPINPAD, onto their smart devices to speed up the digitisation process many are now tackling.

Essentially, opening up universal payments and authentication methods that feel familiar, for both online and face-to-face transactions, will be key to opening up a world of possibilities when it comes to redefining how businesses engage with consumers.

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Brexit responsible for food supply problems in Northern Ireland, Ireland says



Brexit responsible for food supply problems in Northern Ireland, Ireland says 7

LONDON (Reuters) – Food supply problems in Northern Ireland are due to Brexit because there are now a certain amount of checks on goods going between Britain and Northern Ireland, Irish Foreign Minister Simon Coveney said.

British ministers have sought to play down the disruption of Brexit in recent days.

“The supermarket shelves were full before Christmas and there are some issues now in terms of supply chains and so that’s clearly a Brexit issue,” Coveney told ITV.

The Northern Irish protocol means there are “a certain amount of checks on goods coming from GB into Northern Ireland and that involves some disruption,” he said.

(Reporting by Guy Faulconbridge; Editing by Tom Hogue)

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