Speech
Speech by Minister Donohoe to the European Financial Forum 2021: Leading the Economic Recovery
By: Minister for Finance; Paschal Donohoe
Published on
Last updated on
By: Minister for Finance; Paschal Donohoe
Published on
Last updated on
Check Against Delivery
Ladies and Gentlemen,
Introduction
I am delighted to take part in the 6th edition of the European Financial Forum.
Unlike last year, we are meeting online today.
I must admit it I do miss physical meetings. Nevertheless, I am still delighted to be here today and I look forward to engaging with you all.
We are all conscious that we are living in unusual and challenging times.
Right across this continent and right across the globe, people of all ages have had to adapt to what we have euphemistically come to call the ‘new normal’.
Covid-19 has generated the greatest crisis of our times, exposing inequalities and vulnerabilities both within and among countries.
It has also showed us another face of globalisation – the emergence of a global risk, one that cannot be resolved by one country alone, but addressing it effectively requires cooperation.
Eurogroup response
As President of the Eurogroup, I have been able to witness first-hand the economic policy response to this pandemic. European institutions and Member States reacted swiftly to mitigate the socio-economic fallout of the Covid-19 crisis.
Collectively and rapidly, we prepared the ground for recovery and we demonstrated our capacity to act together when it matters most.
The Eurogroup continues to act as a catalyst for sound policies both in the recovery and beyond.
Citizens need a strong European economy, with the euro at its heart, to drive economic recovery and the return to a sustainable growth path.
We have demonstrated our unity of purpose at Eurogroup in pursuing a countercyclical budgetary stance.
The results of our efforts are magnified when we coordinate our approach - whether rising to meet new challenges posed by the pandemic, or on existing issues like building a resilient and competitive Banking Union.
In November last year, we took an important step with the agreement on the European Stability Mechanism (ESM) Treaty.
I am happy to report that all Member States have now signed the ESM Treaty and the Single Resolution Fund Amending Agreements.
This is an important milestone for the Eurogroup.
Following the ratification of the Treaty, the ESM will become the backstop to the Single Resolution Fund (SRF), taking us a step closer towards completing the Banking Union, which will make our Economic and Monetary Union more resilient.
Other factors also suggest that there are grounds for cautious optimism about the prospects for the European economy.
There is the EU trade deal with the UK, the new US Administration, and the prospect of Recovery and Resilience Facility (RRF) funds reaching Member States in the second half of this year.
The agreement on Recovery and Resilience Facility is the last and biggest building block put in place for the Next Generation EU.
This year, the focus is resolutely on coordinating our policies to shield citizens from as much economic harm as we can.
Time is of the essence to roll out the measures that we agreed and to set ourselves on the path for a sustainable recovery.
Digital Finance
In the past year, we have seen how the pandemic has accelerated the move to digital for the financial services sector.
My Department is working with the European Commission on key policy proposals such as strengthening the digital and operational resilience of the financial system.
This is part of a package of measures to further enable and support the potential of digital finance while mitigating the risks.
This involves examining how to bring about a more efficient and secure financial system, for both businesses and consumers across the Euro zone.
We are strongly supportive of the European Commission’s New Digital Finance Strategy, which will facilitate the scaling of innovation cross-border, while ensuring high standards of consumer protection.
Digital Euro
It is important that Europe stays at the forefront of new technologies in payments and banking and to that end, we continue to participate in the digital euro project with great interest.
A digital euro will have profound implications for fundamental freedoms, including privacy and data protection as well as offering huge opportunities for financial efficiency, inclusion and security.
As such, the need for close political oversight is clear.
Being also so closely connected to the issue of Economic and Monetary Union means this is a top priority for my colleagues at Eurogroup.
The ECB has completed its public consultation and we look forward to engaging with a broad range of stakeholders to explore how to take this project forward.
International role of the Euro
The euro is the second most widely used currency in terms of its share of global payments.
The international role of the euro is underpinned by the resilience and stability of our financial architecture and financial markets.
As part of Europe's commitment to an open, competitive and rules-based global economy, we will continue to work on enhancing the international role of the euro.
The currency, at its heart, is an expression of our shared values. It can also be at the heart of the economic recovery and recapitalisation of businesses in the EU and internationally.
Green and Sustainable Finance
On Green and Sustainable Finance, we continue to progress toward our ambition to be a global financial hub.
The EU’s European Green Deal and its upcoming Renewed Sustainable Finance Strategy are key policy initiatives that will frame our work in the critical path to reach the EU’s 2030 energy and climate targets.
As we approach COP26 in a few months’ time, it is important that policy makers and investors have the ability to develop a full suite of financial instruments to fund the ambitious transition to a low carbon greener and more sustainable economy.
Ireland is ideally position to play a central role in this agenda, in the EU and globally.
By further improving convergence of these and other policies across Europe, we are one-step closer to completing the Capital Markets Union.
Ireland’s Future Ambition for Financial Services
This Government continues to support further development and growth of International Financial Services (IFS) here in Ireland.
The Programme for Government where Ireland for Finance is our key strategy, underlines our commitment to further deepen and diversify IFS in Ireland.
The 3rd Action Plan, launched today, showcases our collective ambition to promote Ireland as a global destination where some of the world’s premier financial services institutions, and best talent, are located.
We are now a number of weeks into the new, post Brexit, relationship between the UK and the EU.
What is clear internationally is that the EU is committed to building an open financial system and one that plays an active role globally.
It is also clear to us here in Ireland that Brexit has emerged as an inflection point in the development of our IFS sector.
The pattern of investments in the wake of Brexit points to a transformation in the nature, scale and complexity of the industry here.
The sector, which has always been an important pillar of the Irish economy, has become broader and more diverse with more firms carrying out a greater range of regulated activities than at any time.
We are an international centre that is committed to the EU and its future growth and development, including a greater role for the euro on the global stage.
At the same time, we are the only common law jurisdiction and the largest English speaking EU Member State.
Innovation has been at the core of our development and we have a hinterland of leading ICT, cloud and software firms in Ireland that are increasingly interconnected with the future of financial services.
A combination of firms relocating from the UK along with some entering the EU Single Market for the first time has joined a vibrant international financial services ecosystem in Ireland.
Many of the most exciting firms in financial services from across the world are choosing Ireland to build and develop the sophisticated technologies that will finance the digital and climate transitions.
This makes us uniquely prepared to play a leading role in the future development of the Single Market for financial services and to create a strong and resilient financial system for Europe in the process.
Conclusion
In Europe, we took bold steps in 2019, committing to climate neutrality and digital finance. This resulted in our European Green Deal and, in parallel, we forged an ambitious new Digital Agenda.
The green and digital transformation of our economies require investment.
In 2020, we made good on our word to prioritise the green and digital transformation with ground-breaking decisions at European level to mitigate the impact of COVID-19 across the European Union.
That is why the completion of the Banking Union and the reinforcement of the Capital Markets Union are of great importance to help unlock additional funding for our transformation.
We have reached a decisive moment. In 2021, we will emerge stronger if we continue supporting each other and working together.
This is what I am relentlessly working towards.
Lastly, I would like to thank IDA, and my colleagues in the Department of Finance, for yet another successful EFF event, and I look forward to seeing you in person next year.
Thank you very much.
ENDS