Anförande av Olle Schmidt i Strasbourg 2008-05-19
Keynote speech on ECB`s Annual Report 2007
Ladies and Gentlemen, Colleagues we are here today to the European Central Bank's annual report for 2007, this is always an important topic, and even more so today when we can celebrate ten years of the EMU, but at the same time have to cope with the ongoing financial turmoil. Both these events give rise to a number of questions for how the ECB works and could work. In this years report from the European Parliament I have therefore chosen to look not only what has happened, but focused more on what to come.
Firstly, let me say that ECB has done and is doing a fantastic job in dealing with the financial turmoil stemming from the US sub-prime mortgage crises.
- Economic growth in 2007 was strong even though the financial turmoil started in August the same year, lowering only 0,1 percent from 2,7 to 2,6 per cent, Unemployment sank to around 7 per cent, unprecedented levels since the mid-eighties. But the pressure on inflation mounted upwards especially due to rise in food and energy prices.
The euro area received two new members Cyprus and Malta, which I warmly welcome.
- Looking ahead what are the challenges for ECB? I believe this financial turmoil, starting out as the sub-prime crisis in the US put the financial markets and the central banks in a new situation. The added value of the common currency area for analysing and dealing with such financial stress is clear. The ECB acted according its procedures on the August 9 operation which provided liquidity in the amount of € 95 billion. ECB has since the financial turmoil started done an excellent job. Still, there are things that need to be looked at. Especially, what can be done in order to improve follow up of ECB and other Central Banks' warnings?
Clear is also the need for a better cooperation with other central banks, both within the EU with not the least Bank of England, as London is the biggest financial centre within the EU, but of course also the FED, the Japanese Central Bank and other central players.
- Concerning the economic and monetary development the ECB is continuing to do a very effective job, having contributed to stable inflation and economic growth. For the future the enlarged euro area adds new strength, but also challenges. The dangers of asymmetric economic development has to be taken very seriously, and each member state, as well as applicant country strive even harder to fulfil the Stability and Growth pact and the Maastrich criteria.
Having had the EMU for 10 years, I can wholeheartedly support and acknowledge that the appeal of joining the Euro area has grown stronger. With a currency today being second only to the dollar, and used a reserve currency the importance of the euro area grows. Especially since the President of the Euro group, Mr Euro is increasing the efforts of coordinating the policy. For me this shows the gains of being a part of this cooperation, but also the costs for staying outside, that to my view increases by the day. I can only hope that Sweden will have a new referendum to also join the Euro shortly.
More members and a stronger Euro also increase the expectations. Therefore decision making has to be efficient transparent and well functioning. I therefore call upon the ECB to once again present a proposal for reforming the Governing council. In the area of transparency, a subject very dear to me, I believe the ECB should do more to explain its decision, more specifically how these decisions were taken and discussions leading up to them. I believe this would give us as politicians, citizens and the financial market a better understanding of their assessments and deliberations.
Finally, as the Euro today is an international currency I believe it needs a common voice, not only informally, but a clear and strong signal within the world economy. I therefore think it is very important to have one seat for the Euro-area within international organisations, to truly make the Euro punch its weight!