Italy's Minister of Finance: "Europe is part of the solution, not part of the problem"

Bundesbank President Jens Weidmann and Italy's Minister of Economy and Finance Pier Carlo Padoan ©Uwe Dettmar

Italy's Minister of Economy and Finance, Pier Carlo Padoan, believes that Europe can only overcome the current crisis through a coordinated strategy. Speaking at the invitation of the Bundesbank and the LOEWE Center SAFE (Sustainable Architecture for Finance in Europe), Mr Padoan therefore called for a collective European solution, not least because Europe is only recovering slowly from the international financial and economic crisis. Low interest and inflation rates are no longer an exception. Instead, he noted, they have become the "new normal". Rapid policy action is needed to dissipate the effects of this development. "All available policy tools must be activated at both the national and the European level," he continued. In Mr Padoan's opinion, these tools include monetary policy but also fiscal and structural policy.

In his welcome address, Bundesbank President Jens Weidmann likewise highlighted the relationship between monetary, fiscal and structural policy, emphasising that sound fiscal policies are an important pre-condition for a stability-oriented monetary policy. According to Mr Weidmann, the large countries, especially Germany, France and Italy, must live up to their particular responsibilities. "The stringent implementation and interpretation of our fiscal rules are essential for building confidence in debt sustainability," he noted.

EU suffering from a credibility crisis

Mr Padoan believes that the European Union (EU) is suffering from a credibility crisis in which national interests tend to prevail over collective ones. Euroscepticism, he observed, is on the rise, meaning that Europe is now at a crossroads. "We cannot keep muddling through as we have done in the past. Europe is part of the solution, rather than part of the problem," he explained.

Among the specific measures to return the EU to a path of sustainable growth, he believes that boosting investment should take top priority. He described the Juncker Plan, the investment initiative launched by the European Commission, as a major step in the right direction, but stressed that it must be extended and implemented more forcefully.

Migration and Brexit pose key challenges

According to Mr Padoan, Europe is currently facing two urgent issues that are further heightening uncertainty – the migration of refugees and the United Kingdom's decision to leave the EU.

In terms of migration, he stressed the importance of integrating migrants into host countries' national labour markets, but also of investing in their countries of origin "to generate decent living conditions and perspectives in addition to security and therefore jobs and growth in these countries".

Brexit poses a serious risk to Europe, according to Mr Padoan. The only response can be to accelerate the process of integration and "deliver to EU citizens a credible promise that Europe is the solution rather than being part of the problem," he concluded.