Once a year, the Bundesbank invites guests from the spheres of politics, academia and society to the Capital City Reception in Berlin to exchange views on the economic situation and current topics. This year’s event saw Bundesbank President Joachim Nagel welcome Zanny Minton Beddoes, editor-in-chief of “The Economist” and co-editor of the German weekly newspaper “Die Zeit”, as a special guest speaker. Around 200 guests came to hear Minton Beddoes and Nagel speak on “Europe’s new global role: competition, cooperation and confrontation”. The audience included members of the Bundestag’s Finance and Budget Committees as well as representatives of various ministries, academic institutions, and associations.

New geopolitical reality

Nagel used his speech to discuss how the geopolitical situation had evolved over the past decades, noting in particular the retreat of globalisation and multilateralism since the financial crisis. He pointed to the mounting national rivalries, the war in Europe, and the pivot away from rules-based systems towards a world shaped more by power politics. Europe, he stressed, would only be able to strengthen its sovereignty and its ability to act by working together.

Improving defence capabilities together

Nagel explained that Europe had to rise to the geopolitical changes under its own steam – economically, politically and militarily. For that to happen, he said, it was crucial to strengthen Europe by acting together. Nagel singled out two areas of action. First, it was vital to think of defence more in European terms. Faced with the gravest threat to its security in decades, and with the United States calling for the continent to contribute more to its own security, Europe, he said, needed to become able to act on its own. Europe will have to build up its defence capabilities through its own efforts – and do so quickly. Nagel criticised the lack of coordination in military procurement and the inefficient use of resources. He welcomed the European Commission’s initiative to establish an EU-wide market for defence equipment through the Readiness 2030 programme and called for closer cooperation, including with non-EU countries like the UK and Norway.

Maximising the single market’s potential

The second sphere in which Europe needed to boost its strength was the single market, which was already the biggest in the world. Nagel called for the single market to be advanced further in strategic areas such as digital technologies, venture capital financing and payments. He emphasised the importance of the savings and investments union and the digital euro. Both of these, he said, could reduce dependencies and boost resilience. With the digital euro, we are helping Europe gain more sovereignty in a critical infrastructure, Nagel remarked. He called on the European Parliament and the Council to quickly establish the legal basis for the digital euro.

Concluding his speech, Nagel called on the countries of Europe to work specifically on their weak points and make Europe fit for its new global role.

Minton Beddoes in favour of reducing Europe’s military dependence

After finishing his speech, Joachim Nagel gave the floor to Zanny Minton Beddoes. In her view, Europe faced three major challenges: a new geopolitical order dominated by the United States and China; a transformation of the economy with mounting protectionism; and a technological revolution driven by artificial intelligence.

Europe, she argued, risked dwindling in importance in these areas because it had no clear strategy for adapting to those changes. Internal problems like an ageing population, a backlog of reforms and the rise of populist movements would make the situation worse, Minton Beddoes said.

At the same time, though, Europe wielded a wealth of potential: strong research capabilities, a skilled workforce, a large market, and the rule of law. But to take on a new global role, what was needed was a radical change of mindset. Europe, she argued, needed to bolster its defences, devise economic and technological strategies, and implement political reforms. Only then would Europe be able to hold its own in the new world order and play a far greater role.

Panel discussion on the role of Europe

Following her speech, Minton Beddoes joined Nagel for a panel discussion on Europe’s global role in a changing world. She stressed that politicians needed to act quicker and more decisively, and criticised the fact that politicians often spent too much time dealing with trivialities. Nagel emphasised that responsibility lay not just with politicians but with all stakeholders, arguing that it would be wrong to view everything unfavourably. Minton Beddoes saw opportunities for Europe in the areas of AI and specialised industries, though she criticised the strong focus on regulation. Regarding the digital euro, Nagel stressed its importance for Europe’s independence. Minton Beddoes pointed out that not only the creation of a digital euro, but also a European safe asset was needed to create a deeper capital market. Both agreed that migration and demographics were key challenges for Europe.