Informal ECOFIN meeting in Berlin: Interview with Olaf Scholz

 

Finance Minister Olaf Scholz
© Federal Ministry of Finance / Photothek

EU finance ministers recently convened for an informal ECOFIN in Berlin. This was the first time since February that you got together in person. How did that feel?

After seven months of video conferences, we were all happy finally to meet again in person. In all of these direct encounters, I have seen that we are united in the common desire to move the European project forward. The European Union succeeded in putting together a strong joint response to the crisis triggered by the coronavirus. But we are all aware that the agreed financial assistance and the recovery fund will require perseverance and patience.

Also, everyone who participated at the ECOFIN readily accepted the restrictions and safety precautions that were necessary in order for us to be able to discuss these recovery efforts in person. The delegations were much smaller. We made sure to maintain a safe distance from each other, and we wore masks as soon as we left our seats. Of course that took some getting used to. But it’s important if we want to have meetings like this. I’ve spoken before about the “new normal” of living under conditions that the virus has forced upon us. We are all living in this “new normal” now. The pandemic is not over by a long shot. So we have to remain careful.

Where do we currently stand in our efforts to manage the coronavirus crisis and its economic effects?

A number of indicators show that the European economy has bounced back noticeably since the spring. This is true for the entire EU, even though the pandemic had varying impacts on individual member states. Certainly one reason for this positive development is the decisive action that we have taken at the national and European level. But it will be a while before our economies reach their pre-crisis levels.

During the ECOFIN meeting, we had very productive talks about the assistance and recovery programmes that individual member states have adopted. We know very well that we have to move forward quickly with our national programmes to implement the EU recovery package. This is essential to ensure a swift rebound. At the same time, we want to use the recovery package as a tool to lay the groundwork for a sustainable, sovereign, socially equitable Europe. The name of the new recovery instrument says it all: Next Generation EU.

What is the situation with the EU’s own resources that will be needed to pay for measures to manage the crisis?

EU own resources are not an end in themselves. In July, the European Council decided that the European Commission will be permitted to borrow a significant amount of funding on financial markets in order to finance the recovery package. New EU own resources will be needed to pay back these loans as planned. Furthermore, own resources are a key component in ensuring a fiscally sovereign union. The EU can be strong only if it has sufficient finances. And the EU can have a powerful voice on the international stage only if it is strong. The detailed discussions that we had on new own resources during the ECOFIN meeting gave me confidence that we will succeed in making progress on this issue.

The debate over fair and effective international taxation is another important topic for the EU. How did these discussions go?

All EU partners agree that that we need to ensure fair taxation at the international level. I emphasised to my fellow ministers how urgent it is for us to make genuine progress on this issue in the near future. Even if member states sometimes have different points of view on this matter, our citizens and businesses expect us to reach common positions. The two key priorities here are: first, a global minimum tax, and second, reaching an international consensus on ways to improve the taxation of global digital platforms. We made good progress on these points during our talks in Berlin. The next international discussions – at the level of the OECD – are set to take place in the autumn.

Another agenda item at the informal ECOFIN was the digitalisation of financial markets. What did this discussion focus on specifically?

Data and digital technology are today what coal and steel used to be in the past. We cannot act as if everything in the area of finance, banks, financial institutions and financial markets will remain the way it has been for decades. The spread of digital technology not only changes business models, but will also spawn entirely new business models that we have no inkling of today. Lawmakers, supervisory authorities and the EU have to adjust to this fact and make the necessary preparations.

During the meeting, you and your counterparts from France, Italy, the Netherlands and Spain published a joint statement on crypto assets. What was the reason for this?

The advance of digital technology includes the issue of digital currencies. These currencies also pose brand new regulatory challenges. The joint statement we issued at the informal ECOFIN aimed to send out a clear message: Germany and its partners firmly believe that private-sector cryptocurrencies are not good for us. Issuing and managing currencies is solely the responsibility of states, or of the EU and the European Central Bank, and it should remain this way. Germany, France, Italy, Spain and the Netherlands are taking a clear position on this issue and will work to ensure that, if necessary, we can prohibit what some major private-sector actors are currently thinking of doing.

What is your overall take on the informal ECOFIN?

In light of the discussions we held, I can assure you that we are all pulling together, with all our strength, to lead Europe out of this crisis as quickly as possible. We are continuing to work on the implementation of European-level decisions that we succeeded in taking this year – decisions that will enhance European solidarity. The pandemic has highlighted how vulnerable we are as human beings and how dependent countries are on each other. This is especially true for the countries of the European Union. No European country can manage the virus and its effects by going it alone. And this is precisely where the EU has proven its value in recent months. We have taken concerted and decisive action, and we are providing a common response to the challenges we face.

All this gives me confidence that we will succeed in using the post-crisis recovery period to press forward with the green and digital transformations of our economies. With the recovery programme, we have achieved a new level of joint European fiscal policy-making and are moving closer to becoming a fiscal union. Europe now has the opportunity to take the next steps that are needed to build a better, more “perfect” European Union. We had a good informal ECOFIN meeting in Berlin.

Finance Minister Olaf Scholz © Federal Ministry of Finance / Photothek


Finance Minister Olaf Scholz
© Federal Ministry of Finance / Photothek

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