Sabine Lautenschläger: A Call for Europe

A Call for Europe

Speech by Sabine Lautenschläger, Member of the Executive Board of the ECB, at lecture series “Mein Europa”, Heinrich-Heine University

• These are the words spoken by Konrad Adenauer in 1946, when reconciling Europe and securing peace were paramount.
• National arrogance and isolationism had culminated in two world wars two world wars which had wreaked death, misery and chaos on Europe.
• For those who lived through the Second World War, a strong Europe, a united Europe, represented the future and the path to lasting peace.
• A united Europe has bestowed peace and prosperty to each Member State and its people the German people included.
• And the future challenges facing each and every one of us can only be met by working together in Europe.

1. Sceptisism towards the advantages of Europe

• Public scepticism towards Europe has grown: in 2007 some 57% of the EU population said they trusted the EU, but this share has now fallen to 44%.
• [1] At the same time, Eurosceptic parties have almost doubled their share of votes over the past ten years.
• [2] One explanation is that people feel unsettled, not only in the face of advancing globalisation and structural changes but also because of increasing migration.
• Far-reaching changes, fear and a sense of disorientation often cause people to reject whats new and retreat to what is familiar.
• Some Eurosceptic parties are pushing for a retreat from Europe, a withdrawal behind national borders.
• Because it fails to recognise the many benefits that Europe has brought us.

Europe has brought peace.

With the European Union we have found a way of resolving conflict that has ushered in the longest period of continuous peace in the history of Europe. The EU has transformed a continent of war into a continent of peace. We should not take this for granted – and the award of the Nobel Peace Prize to the EU reminds us not to do so.

Europa has brought freedom.

• Lets not forget that in 1957, only 12 of the current Member States were democracies, compared with 28 now.
• Europe has provided an unprecedented degree of freedom of movement.
• Thanks to the EU, European citizens enjoy border-free travel and are free to study and work within the EU, creating inestimable development opportunities for everyone.
• And every year we cross one of the internal borders within the Schengen area an almost inconceivable 1.27 billion times.

Europe has brought prosperity.

• This last point, more prosperity across Europe, is one I must adress separately.
• Because the economic benefits of Europe are often a point of contention in Germany.
• Hardly any other economy has profited from the Single Market as much as Germany.
• Were it not for an open Europe and the creation of the Single Market, the robust economic growth of the post-war era would have levelled off over time.
• Free movement of goods, capital and payments and freedom of services have allowed Europe to grow more closely together, have advanced the German economy and have brought prosperity to us all.
• Without the euro, open markets in Europe would not have lasted long.
• I have now spoken about the past advantages of a united Europe.
• Here, too, I am convinced that all of us, Germany too, will be able to master the challenges of the future in a united Europe.

2. The advantages of Europe for future challenges

All countries in Europe face major, predominantly global, challenges, such as increasing worldwide competition, climate change and technological progress.

a. Global competition

• And we need the EU in order to retain our capacity to act and to shape global developments.
• The economic weight of Europes Member States has drastically declined over the past decades.
• Looking at the aggregate economic performance of EU countries, the EUs share in global economic output has fallen from around a third in the 1980s to a sixth today.
• In such an interconnected world, individual countries will therefore find it increasingly difficult to uphold their prosperity and social security provisions.
• The OECD estimates that the global revenue shortfall owing to tax avoidance amounts to between 4% and 10% of corporate income tax receipts.
• By pulling together, countries in Europe are in a better position to withstand global developments.

Power lies in numbers.

• And around 50% of cross-border financial holdings in the euro area are from other euro area countries.
• In practical terms, this means, for example, that Germany exports more goods to France than to China.
• So its not surprising that turning away from Europe could have disasterous consequences for our prosperity.
• No country has the heft required to make itself heard in international trade talks and signficantly influence trade conditions.
• Neither is Germany: our share in global trade is only half the size of that of the EU.
• [9] If we are to profit from this international growth, we need open markets and a strong voice in international trade talks.
• And with the combined weight of EU Member States in global value chains, European firms can set their standards throughout the world.

b. Climate change

• Ladies and gentlemen, joint action in Europe is also needed to overcome a completely different challenge facing all countries, namely climate change.
• But countries cannot win the struggle against climate change on their own: pollution does not respect borders.
• Climate change is a global phenomenon that poses complex coordination issues for national governments and affects many areas of life, including the economy.
• Allow me to concentrate on some of the economic consequences of climate change.
• For one, climate change affects competitiveness in the Single Market.
• Even the direct effects of climate change alone may have an enormous impact on the economy.
• All of this shows the extent to which climate change and environmental measures can affect economic activity, assets and jobs.
• Europe offers a unique opportunity to combat climate change and so reduce the potential damage to the economy.
• As one of the three largest economic blocs in the world, Europe can be at the vanguard of the fight against climate change.
• Third, the ECB together with other leading central banks can examine the potential effects of climate change on the conduct of monetary policy.

c. Payments

• Payments are one such example.
• Safe, reliable and efficient payment systems are a vital part of a well-functioning and integrated economy.
• Technological progress and changing payment habits have fundamentally altered the payment system and thrown up new challenges.
• End users now expect to be able to transfer money around the world in real time and at low cost.
• If they want to make cross-border payments in Europe with ease, they frequently rely on global players such as VISA, Mastercard and PayPal.
• According to current plans, users across the globe should be able to make payments not in euro or US dollars, but in Libra.
• Irrespective of how the payments landscape evolves over the coming years, it is essential that users of the various payment systems can be confident that all payment solutions, old and new alike, are safe and efficient.

3. A plea for more European integration

• This topic has many different aspects, but I would like to focus today on one key question: how can we advance the banking union project?
• A robust banking sector is thus vital for a healthy European economy and a stable single currency.
• And the banking union a single framework for the supervision and resolution of banks in the euro area has already come a long way.
• But the banking union is still lacking an important component: a European deposit insurance scheme.
• In the long run this can only be done through a European deposit insurance scheme.
• These three features of a shared deposit insurance scheme would strengthen the individual responsibility of Member States, banks and shareholders and further incentivise risk-based behaviour.
• And this would ultimately be to the benefit of the EU and all its member countries.

4. Finding a common way in Europe

• Europe is our opportunity to act together where we face global challenges.
• More Europe is therefore the way forward in such an interconnected world.
• But dont get me wrong this is not an appeal for Europe to regulate all aspects of our lives.
• Successful cooperation requires us to work on the basis of shared values, objectives and cooperation principles, of course.
• And despite all the benefits and the motto united in diversity, there is growing scepticism about Europe.
• I firmly believe that the time has come for us to redefine the way in which we work and, in particular, the way in which we communicate.
• Only then will we be able to counter the growing polarisation among the people of Europe.
• A similar kind of model for exchanging views and participating in political discussions on European matters could also serve Europe well.
• Citizens assemblies could be a helpful way of bringing together citizens in a given country to talk about European issues.
• And even if it does take longer, we all stand to gain from closer cooperation within Europe.

Conclusion

• Never before in the history of our continent have we lived together in such peace for so long, and never before have we enjoyed such freedom.
• Europe has brought us considerable prosperity, and this has benefited all countries, including Germany.
• It is then often easier to think in national terms and to ignore the problems to a certain degree.
• And populists are exploiting this situation to spread a new kind of nationalism a withdrawal from Europe.
• As Konrad Adenauer once said, No European nation is able to protect itself militarily or develop economically on its own.
• If one wanted today to uphold the traditional concepts of nationalism, this would be a task for Europe.