Europe should stay on course and remain an attractive place to work. And I think this generation here has a vital role to play in that, said Bundesbank President Joachim Nagel at the two-day international conference “Young Factor” held in Milan by the Osservatorio Permanente Giovani-Editori with the aim of improving financial literacy. Over 350 school pupils attended this year’s event to discuss financial literacy and the European Union with the governors of several Eurosystem central banks. 

“It’s up to Europe!”

Mr Nagel noted that the fiscal package presented by Germany’s government was good news in terms of promoting economic growth in Germany. In a roundtable session with six other Eurosystem central bank governors, he said that the positive economic effects could well spill over to other countries such as Italy. Mr Nagel explained that the German government had fulfilled its obligation to create fiscal leeway for future investment. Now, he continued, it was up to Europe to foster European competitiveness. We need to do more, we need to integrate more, he said, adding that Germany should play a key role here.

“Europe doesn’t need to hide”

Chatting to the pupils, Bundesbank President Nagel stressed two steps that Europe needs to take to boost its competitiveness. The first step, which I think is the most important, is to complete the Savings and Investments Union, he told one of the students. This should be followed by a fully integrated banking union, he continued. Both of these factors would help to make Europe more attractive to foreign investors, he explained. However, Mr Nagel stressed that Europe did not need to hide itself away. We are a strong economy and, for so many countries, a strong trading partner.

Demographic developments in Germany and Europe are another challenge, according to Mr Nagel. Immigration of skilled workers is needed to offset the effects of the baby boomers leaving the labour market, he clarified. He added that investment in digital innovations such as artificial intelligence (AI) is also needed in order to at least maintain the desired level of competitiveness. The Bundesbank President emphasised, in particular, how important it is to keep young people in the European labour market: We have to give young people the feeling that Europe is a success story. If they feel that Europe is falling behind, maybe some of them will think, okay, then I'm leaving Europe, working somewhere else. And that is not in our interest.

In the Q&A session with the school students, he also talked about the international role of the euro, how US tariff policy would affect Europe and why crypto-assets cannot function as a currency from a central bank perspective. 

Visiting the German School of Milan

While he was in Milan, the Bundesbank President also visited the German School, one of 140 German schools abroad worldwide. There, Mr Nagel explained to pupils how the ECB Governing Council makes decisions and how the Eurosystem works. I have learned that it is important to have an independent central bank that nonetheless has close links to policymakers, the G7/G20 and the Cabinet and can advise them, said Achilles, a pupil from Year 11. The students also spoke with the Bundesbank President about the future of the euro and opportunities to join the Bundesbank. During his visit, Mr Nagel also took the opportunity to sign the school’s guestbook.