“The EU and the euro always commanded the support of the majority of European citizens.” President of the European Central Bank, Mario Draghi said on Thursday. Draghi was speaking during a ceremony where he received a honorary doctorate form the University of Tel Aviv.
Key highlights from Mario Draghi’s speech:
- The recovery in the euro area is resilient and is increasingly broad-based across countries and sectors
- Domestic demand, supported by the ECB’s monetary policy, is the mainstay of that recovery
- Five million more people are employed now than were in 2013, and unemployment though still too high is at an eight-year low
- The institutional architecture of the Economic and Monetary Union remains incomplete in a number of aspects
- The crisis has exposed structural weaknesses in our construction and has forced us to address them.
- The repair has started with the creation of the banking union
Excerpt from Draghi’s speech
The eruption of the global financial crisis in 2008, and the subsequent sovereign debt crisis in Europe, caused a deep recession worldwide, a sharp increase in unemployment and exposed the incompleteness of some parts of the EU institutional architecture. Fertile conditions to give voice to populist and nationalistic rhetoric.
But that period of crisis was also conducive to improving our understanding of economic and political forces, and to translating this new knowledge into action. The crisis has thus resulted in a form of creative destruction, where established paradigms have been critically revisited, where flawed practices have been exposed and replaced by sounder ones and where new research addressed previously neglected aspects of our societies. This renewed effort has both greatly deepened our understanding of economics and shaped our policy response.
The crisis is now behind us. The recovery in the euro area is resilient and is increasingly broad-based across countries and sectors. Domestic demand, supported by the ECB’s monetary policy, is the mainstay of that recovery. Five million more people are employed now than were in 2013, and unemployment though still too high is at an eight-year low. Worldwide, the financial sector is now more resilient. The global economic outlook is also improving, and downside risks are moderating.
However, what we need in Europe to ensure that economic growth and higher prosperity is sustained through time are structural reforms and a renewed sense of purpose for the EU.
Started in the aftermath of the Second World War, European integration was the response to citizens’ desperate need for peace. The system of treaties between governments that had dominated European relations between the two wars and even before had utterly failed to deliver what governments are mainly for: security and prosperity. Pooling sovereignty on issues of direct common interest became the new basis for cooperation between the European nations. At the time such a project seemed bold and optimistic – just as calling for further, deeper integration seems bold and optimistic today. But our founders were right. Europe has delivered peace, prosperity and political stability for a period of time that has no precedents in its modern history.
This year marks the 60th anniversary of the Treaty of Rome that created the European Union and the 25th anniversary of the Maastricht Treaty that created the Monetary Union.
Further progress is needed. The institutional architecture of the Economic and Monetary Union remains incomplete in a number of aspects. The crisis has exposed structural weaknesses in our construction and has forced us to address them. The repair has started with the creation of the banking union.
But the work is far from over and the challenges we face go beyond Economic and Monetary Union. They pertain to security, migration, defence, and generally all those challenges that can be addressed only by pooling sovereignty. And these challenges are greater than in the past.
Today we can sense a rising wave of energy in demanding joint European action. The European Union and the euro always commanded the support of the majority of European citizens, but, often, it was only the vocal opposition that was heard. Now this silent majority has regained its voice, its pride, and its self-confidence. Only by working together can the nations of Europe overcome these challenges. The opportunity for progress is real. – Full speech here
Meanwhile in Germany, Chancellor Angela Merkel and her finance minister Wolfgang Schaeuble want to install a German at the head of the European Central Bank when Mario Draghi’s term expires in two and a half years, in 2019. according to Spiegel magazine.