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Dec 14, 2023 353 likes •406 views

Harnessing Tailwinds for Strengthening the Euro Area 17

SLIDE 1 ✁✂✄☎ ✂✄ ✆ ☎ ✂ ✝ ✂

17 18

✞✟ ✠ ✡ ☛ ☞☛✌✍ ✎ ✏ ✑ ✒ ✓ ✔✕✖✗✕✘✙✗ ✚ ✛✕✜✕✗✙✢ ✣✤✥ ✦ ✧ ★✍✩ ✪ ✪ ✡ ✫ ✪ ✬ ✭✮ ✯☛ ✰✮ ✱ ✲

Harnessing Tailwinds for Strengthening the Euro Area

✳ ✴ ✵ ✶ ✷ ✸ ✹ ✺ ✻ ✼ ✶ ✷✵ ✽ ✹ ✾ ✿ ❀ ✵ ❁ ❁ ❂ ✺ ✺ ❂ ✵ ✿ ❃ ✼ ✶ ✷ ✵ ✺ ❄ ✾ ❄ ❃ ✵ ❅ ✿ ✸ ✾ ❆ ✸ ✶ ❆ ✾ ❄ ❂ ✵ ✿ ✺ ❇ ❈ ❉ ❊ ❉ ❋●❍ ■ ❏❑▲ ▼◆❖P◗❘ ❙❑P▲

❚ ❯ ❱ ❲ ❳ ❨ ❲ ❨ ❳ ❩ ❬ ❭ ❲ ❲ ❨ ❲ ❪ ❲ ❳ ❲ ❫ ❲ ❴ ❨ ❨ ❨ ❪ ❵ ❛ ❜ ❝ ❞ ❡ ❢ ❣ ❜ ❞ ❜ ❝ ❞ ❡ ❤ ✐ ❥ ✐ ❞ ❤ ❦ ❧ ✐♠ ♥ ♥ ♥ ♦ ✾ ✽ ✵ ✺ ❂ ❄❂♣ ✹ ✸ q ✾ ✿ r ✹ ✵ s ❄q ✹ ✵ ✶ ❄✽ ✶ ❄ r ✾ ✽ ♦ ✾ t ✹ ✸ ❆ ❂✿ ❂ ✿ r ✶ ✿ ✹ ❁ ✽ ❆ ✵ ✉ ❁ ✹ ✿ ❄ ✷ ✾ ❄✹ ❭ ❲ ❨ ✈

Broad based upturn, ongoing convergence

✇ ① ② ③ ① ④ ④ ① ⑤ ⑥ ⑦ ⑧ ① ① ⑨ ⑤ ⑩ ② ❶ ❷ ① ❸ ② ⑥ ① ❹ ❺ ❻ ❼ ❽ ❾ ❽ ❺ ❻ ❼ ❿ ➀ ➁ ➁ ➂ ➃ ➄ ❾ ➃ ➁ ❾ ➅ ➆ ➅ ➇ ➈ ➆ ➈ ➇ ➉ ➆ ➇ ➉ ➉ ➆ ➉ ➉ ➇ ➉ ➊ ➆ ➋ ➌ ➌ ➊ ➆ ➆ ➆ ➆ ➊ ➆ ➍ ➆ ➎ ➆ ➅ ➉ ➆ ➉ ➊ ➉ ➍ ➉ ➏ ➐ ➑ ➒ ➓➔ ➒ → ➣ ➊ ➆ ➆ ➆ ↔ ➉ ➆ ➆ ↕ ➙ ➛➓ ➑ ➜ ➝ ➞ ➔➒ ➟ ➑➠ ➝ ➡➒➑➠ ➢➔ ➤ ➥ ➦ ➧ ➧ ➨ ➩ ➫ ➭ ➯ ➲ ➳ ↕ ➙ ➵ ➸ ➺ ➻ ➼ ➲ ➸ ➳ ➩ ➙ ➽ ➾ ➚ ➪ → ➐ ➒ ➢ ➔ ➶ ➹ ➘ ➐ ➒ → ➴ ➔ ➑ ➠ ➷ → ➟ ➟ ➬ ➶ ➶ ➬→ ➠ ➮ → ➱ ➠ ➢ ➑ ➜➢ ➐ ➜ ➑ ➓ ➬→ ➠ ➶ ✃ →➒ ➓ ➐ ❐➑ ➜ ➪ ➴ ➑ ➬ ➠ ➊ ➆ ➉ ❒

SLIDE 2 ✁✂✄☎ ✂✄ ✆ ☎ ✂ ✝ ✆ ❮

Public debt remains high in many member states

❰ Ï Ð Ñ Ò Ó Ô Õ Ò Õ Ö Ò Ð Ó Ô Ï Ô Ò Ó × Ø Ô Ù Ò Ú Û Ü Ý Þ Ý ß Ý Ý ß Þ Ý à Ý Ý ß á â Ý â Þ ã Ý ã Þ á Ý á Þ Ý Ý Ý Þ ß Ý ß Þ ä å æ ç è é ê ë ì í î ï ð ñ ò ó ô õ ö ÷ ï ô ð ë ò ø ù ú û ü ý þ ÿ ✍ ✎ ✏ ✑ ✒ ✓ ✔ ✒ ✕ ý þ ü ✍ ✖ ✕ ✗ ✘ ✙à Ý ß Þ ✚✔ ü ✛ ✜ ÿ ✕ ✗ ÿ ý ✗ ✕ ✖ ✢ ü ✜ ✎

× Ñ Ð Ï Õ Õ Ò ✁ × ✂ ✄ Ô Ð ☎ Ò Ó ☎ ✄ Ô Ù Ò Ú Û Ü Ò ✆ ✁ ✝ ✂ ✞ ☎ ✄ Ñ ✟ ✠ Ï ☎ ✄ Ý Þ Ý ß Ý Ý ß Þ Ý à Ý Ý ß á â Ý â Þ ã Ý ã Þ á Ý á Þ Ý Ý Ý Þ ß Ý ß Þ ä ✑✖✕ ✗✣ ✤ ✍ þ ✥ ✕ ✜ ✣ ✓ þ ✕ ✜ ÿ ✍ û ✦ ✕ ✢✜ à Ý ß ✧ à Ý ß ✧ ✤ þ ✍ ✍ ÿ ✍ ✑þ ✍ ✗ ✕ ✜ ★ ✩ ü þ✖ý ✪ ✕ ✗ ✫ ✣ ✦ þý ✎ ✒ ✕ ✕ ✎ ✖þ ✢ÿ ✬ ✖ ÿ þ✢✖ ✍ þ✢ü ✜ ✡

Large interest savings, expansionary fiscal policy

☛ ☞ ✌ ✭ ✮ ✯ ☛ ✭ ✰ ☞ ✌ ✯ ✮ ✱ ✲ ✳ ✴ ✯ ✌ ✵ ✰ ☞ ✌ ✯ ✮ ✱ ✶ ☞ ✌ ✭ ✮ ✰ ✷ ✸ ✭ ✰ ☞ ✌ ✵ ✭ ☞ ✭ ✹ ✲ ☛ ✹ ✯ ✌ ✺ ✲ ✰ ✌ ✭ ✹ ✲ ✵ ✭ ✮ ✸ ☛ ✭ ✸ ✮ ✯ ✻ ✴ ✮ ✰ ✼ ✯ ✮ ✱ ✷ ✯ ✻ ✯ ✌ ☛ ✲ ✽ ✴ ✲ ✮ ☛ ✲ ✌ ✭ ✯ ✺ ✲ ✴ ☞ ✰ ✌ ✭ ✵ ✾ ✿ ❀ ❁ ❂ ❀ ❁ ❂ ❃ ❁ ❀ ❃ ❁ ❂ ❄ ❁ ❀ ❅ ❄ ❀ ❃ ❃ ❃ ❄ ❃ ❆ ❃ ❇ ❃ ❂ ❃ ❈ ❃ ❉ ❄ ❀ ❃ ❊ ❋ ✲ ✮ ✼ ✯ ✌ ✱

✮ ✯

✌ ☛ ✲ ❍ ✭ ✯ ✻ ✱ ■ ✴ ✯ ✰ ✌ ☞ ✭ ✹ ✲ ✮ ☛ ☞ ✸ ✌ ✭ ✮ ✰ ✲ ✵ ❏ ✸ ✮ ☞ ✯ ✮ ✲ ✯ ✽ ✰ ✌ ❑ ✾

✮ ✲ ☛ ✯ ✵ ✭ ✴ ✲ ✮ ✰ ☞ ▲

in % of GDP

▼ ◆ ❖ ◆ P◗ ❘ ❙ ❚ ❯ ❱ ◗ ❚ ❙ ❲ ❳ ❱ ❱ ❙❲ ❨ ❯ ❩ ❬ ❬ ❭ ❪ ❫ ❴ ❵ ❛ ❜ ❝ ❞ ❡ ❢ ❣ ❤ ❞ ✐ ❝ ❞ ❥ ❜ ❦ ✐ ❝ ❞ ❧ ❜ ♠ ❡ ❵ ❜ ♥ ♦ ❦ ✐ ❝ ❵ ♣ ❞ ❫ ❡ q ❦ r ❦ ♥ ♦ ❦ ✐ ❝ ❦ ♣ s t ✉ ❦ ✈ ✇ ❦ ♥ ❪ ❞ ❛ ✉ ❡ ❝ ① ❞ ❥ ✇ ✐ ❦ ✐ ② ❦ ❤ ❞ ✐ ✉ ❛ ❜ ♥ t ③ ❥ ♥ ❵ ④ ✐ ❝ ❦ ✈ ❝ ❛ ✈ ❦ ✉ ✇ ❵ ✐ ❡ ⑤ ⑥ ⑦ ⑦ ⑥ ⑧⑨ ⑩ ❶ ❷ ❸ ❹❺❻❼ ❽ ❾❿ ➀ ❸❽❹⑨ ❻ ➁ ➂ ➃ ➄ ➅ ➅ ➆ ➇ ➈ ➉ ➊ ➋ ➌ ➍ ➎ ➆ ➏ ➏ ➋ ➏ ➌ ➏ ➍ ➅ ➏ ➅ ➅ ➅ ➆ ➅ ➇ ➅ ➈ ➅ ➉ ➅ ➊ ➆ ➏ ➅ ➋ ❥ ➐ t ❧ ❫ ❴

SLIDE 3 ✁✂✄☎ ✂✄ ✆ ☎ ✂ ✝ ✁ ➑

Three objectives

Growth and convergence Growth and convergence Shock absorption Shock absorption Resilience Resilience

➒

Hepp and von Hagen (2012), Sorensen and Yosha (1998)

−

➓ ➔→➣↔↕➙ ➛➜↔ ➔➛➝↕➙➛➞ ➟ ➛→➠ ➣➙➡➢ ➤ ➥ ↕➡➔➛➞ ➙→➛➜➡➥ ➣→ ➡

Milano and Reichlin (2017)

−

➦➧➨➔➠ ➛➩➡➨→➝➙↕➨➜ ➫↕➛ ➝➭➩➞↕➔ ↕➜➡➙↕➙➭➙↕➨➜➡ ➯➣ ➲ ➔➞➳ ➵➸➺➻➼ ➽➾➚ ➵➪ ➶ ➢ ➹ ➘➚ ➶➦➴

Shock absorption in the euro area

SLIDE 4 ✁✂✄☎ ✂✄ ✆ ☎ ✂ ✝ ➷ ➬

ESM as crucial element of the euro architecture

−

➮➛→ ➙↕➔↕➝➛➙↕➨➜ ➨➥ ➙➧➣ ➱➪ ✃❐

Enhancing the ESM

−

➪ ➛➜↔➛➙ ➥ ➨→ ➔→↕➡↕➡ ➝→➣ ➫ ➣➜➙↕➨➜➢ ➣➡➝➣➔↕➛➞➞❒ ➡➭→ ➫ ➣↕➞➞➛➜➔➣

−

➮→➣ ➫ ➣➜➙↕➫ ➣ ➥ ➛➔↕➞↕➙↕➣➡ ➡➭➩❮➣➔➙ ➙ ➨ ➝→➣❰Ï ➭➛➞↕➥ ↕➔➛➙↕➨ ➜ ➔→↕➙ ➣→↕➛

−

Ð ➭➞➣➡ ➥ ➨→ ➨→ ↔➣→➞❒ →➣➡➙→➭➔➙➭→↕➜Ñ ➨➥ ➡➨ ➫ ➣→➣↕Ñ➜ ↔➣➩➙ ↕➜ ➔→↕➡➣➡

Strengthening the euro area crisis mechanism

Two stage procedure in case of crises

Ó Ô Õ Ö × Ø Ù Ú Û Ü Ý Þ ß à á â ã ä Ü á Ý Ø ß å Ô æ ç è é ê ë ì í ì ë î ï ð î ê ï ñ ï ë ò î ð î ñ ò ì ï ì ê ò ó ô õ ö ÷ ø ù ÷ ú û û ü ÷ ü ý þ ü ÿ ☛ ☞ ✌ ✍ ✎ ÷ ø ù ÷ ú û û ü ✏ ✑☛ ✒ ÿ ☛ ÷ ✑ ✓ ☛ ✓ ø ✔ ✕ ✑ ☛ ✑ø ✔ ú ✖ ✑☛ ✗ ó ñ ï

ê ñ é ✁ é ê ë ✂ ✄ ☎ ✆ ë ✝ ✞ ☎ ✆ ✝ ✟ ✘ è ✙ ✝ ✚ ✠ ✡ ó ñ ï

ê ñ é ✁ é ê ë ✟ í ð ✁ ï ð

é ✛ í ï ✚ é ✜ é ð ë ✂ ✢ ✣ ✆ ë ✝ ✤ ☎ ✆ ✝ ✟ ✘ è ✙ ✝ ✚ ✡ õ ✝ ✚ é ë ✥ î ð ✤ ✝ ✚ ✦ ✧ ï ✝ ñ î ë ï ✝ ð ì ✝ ✟ ✟ ï ì ★ î ñ ✚ í ñ é ì ï ð ñ î ì ë ✣ ò é î ✚ ì ✩ î ì é ✁ ✝ ð ✁ é ê ë ì í ì ë î ï ð î ê ï ñ ï ë ò î ð î ñ ò ì ï ì ê ò ó ô õ ✪ ✝ ✜ ✫ ñ é ë é ✁ ê é ✟ ✝ ✚ é ✫ ✚ ✝

î ✜ ✜ é é ð ✁ ✬ ✑ û ü ✭ ✮ ✯ ✰ ✱ ✰ ✱ ✲ ✳ ✴ ✵ ✶ ✲ ✱ ✷ ✯ ✮ ✱ ✸ ✴ ✹ ✱ ✴ ✺ ✰ ✮ ✻ ✺ ✼ ✴ ✽ ✻ ✺ ✾ ✰ ✱ ✲ ✳ ✴ ✵ ✭ ✷ ✯ ✱ ✿ ✴ ✯ ✯ ✴ ✰ ✱ ✯ ✷ ✽ ✱ ✷ ✯ ✮ ✺ ✳ ❀ ✮ ❁ ✺ ✴ ✽ ✴ ✰ ✰ ✲ ✯ ✸ ❂ ❃ ❄ ❅ ❆ ❇❈ ❉❊ ❊ ❋ ❅ ●

❅ ❍

■ ❉❏ ❑ ❇❋

❉❏

▲ ▼ ◆❅

❉■❖ ◆

P ◗ ◆ ■ ❉❑ ❉ ❘ ◗ ■❉❖ ❏ ▼ ❇◗ ❋ ❊ ❅ ❊ ❙ ❚ ❃ ❯ ◗ ❏ ▲ ❅ ❖ ❱ ❘ ❖ ❊ ❊ ❉❍ ❇❅ ■ ❲ ◆❅ ❊ ❲ ❖ ❇● ❇❅ ❳ ❅ ❇❊ ❙ ❨ ❖ ❋ ◆ ❑ ❅ ❩ ❬ ❏

◆❉

■ ❭ ❪ ❈ ❅ ■ ◗ ❇ ❙ ❫ ❚ ❴ ❂ ❵ ◗ ❛

SLIDE 5 ✁✂✄☎ ✂✄ ✆ ☎ ✂ ✝ ❜ ❝

Only a consistent euro architecture is more stable

−

❞➛➙↕➨➜➛➞ →➣➡➝➨➜➡↕➩↕➞↕➙❒ ➥ ➨→ ➜➛➙↕➨➜➛➞ ➡➙→➭➔➙➭→➛➞ →➣➥ ➨→➟ ➡

−

➸➞➨➡➣→ ↕➜➙ ➣Ñ→➛➙↕➨➜ →➛➙➧➣→ ➙➧➛➜ ❡➩→➣➛➙➧↕➜Ñ❢ ➔➭→→➣➜➔❒ ➭➜↕➨➜

−

➦➙➛➩↕➞↕➙❒ ➨➥ ➙➧➣ ➣➭→ ➨ ➛→➣➛ ↔➣➡➝↕➙ ➣ ➞➛➔➠ ➨➥ ➥ ↕➡➔➛➞ ➔➛➝➛➔↕➙❒❣➔➨➟ ➟ ➨ ➜ ➶➱

Elements of a feasible „deal“ for the euro area:

Pragmatic steps rather than grand deal

❤✐❥❦ ❧♠ ♥♦♣ qrs❧s❦q t ✉✐✈✇♠✐①✐q② ①✐❥❦ ❧♠ r③♠q❥ t ④③r ♦ ⑤①✐s❧s❦q ✈✐s✐❥ ⑥ qr ⑦ ⑧♦✈✈♦s ❤✐s❧s❦✐s⑨ t ⑩ q ① ♦r✈ ④❶ ❷③②⑨ q⑥ t ❸s❦r q❧❥q ④❤ ✉❸ ⑧r✐❥✐❥ ❹r q♣ qs ⑥✐♦s t ④ ✉❺ ✈❧s②❧ ⑥ q t ⑧r q②✐⑥ ♦r ❹ ❧r⑥✐❦✐✇❧ ⑥✐♦s ⑧♠❧③❥q❥ t ⑩ q✈♦♣ ❧♠ ♦① ✇r✐♣✐♠q⑨ q❥ t ✉❻❻✉ ⑤❤✐s❧s❦✐s⑨ ❶s✐♦s ⑦ t ⑧♠♦❥q ✉⑩❺ ⑨ ❧✇❥ t ❼❧r✈♦s✐❽ q ✐s❥♦♠♣ qs❦❾ ①r ❧✈q❿ ♦r➀ ❥ t ④➁❸✉ ➂❥ ⑥ ✇➃❧❥q ➄r q➅✐s❥③r ❧s❦q➆ ➇ ➈ ➉➊➋➊➌ ➍➎➏ ➐ ➑➒➋➊➌ ➑➓ ➔➔➔ →➣↔↕➙➛ ➜➝ ➣➞↔➜➟➠ ➡➢ ➜➟ ➝↔➞➤➔➡ ➝ ➞➣↕➙ ↔➥ ➞→➠➜ ➦ ➍➧➧➍ ➐ ➎➋ ➍➨ ➩ ➐➊➌➌ ➑➏➓ ➫➭ ➯➲➳➵➡➝ ➞➣↕➙ ↔ ➥ ➞ ➫➸↔➟➠➝➡➞➺➻➼