20260504-1500-COMMITTEE-ECON Original Teil 1

May 04, 2026 18:28 · 20:00 · English · Whisper Turbo · 3 speakers

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Lecture Index

0:00

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Okay, so good afternoon everyone. We'll start today's meeting with the adoption of the agenda. If there is no objection, the agenda is adopted. Interpretation will be available today in 12 languages.

0:15

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Let's now move to point three, reports from trilogues. The first trilogues regarding the so-called Omnibus 4 on SMEs took place on April 13. The co-legislator presented their respective mandate and agreed to continue work at technical level with a view to preparing discussion at the next political trilogue scheduled for June 9. So now let's move to the point four of the agenda.

0:43

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

And I'm going to continue in French if you please.

0:49

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

I'm happy to welcome the president of the European European Bank. I'm very happy to have the last time with us in this case. I imagine we'll be able to see you in other cases. In this case, in this case, in the European Commission, in your quality of vice president, it's the last time. I think we've all been absolutely happy to work together.

1:16

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

with you, to have these exchanges regularly. And then we're going to continue today, because we arrive at a moment where there is, of course, the report that is published right now, at 14h30, and we have a lot of questions. Every time that someone from the BCE comes in, I say, it's perfectly fine. I would like to say, but we are in a moment where the question of the monetary policy with what's happening today...

1:45

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

d'un point de vue géopolitique et économique interroge. La question de la stabilité financière, forcément aussi. Donc, évidemment, comme d'habitude, vos propos vont être plus que nécessaires et indispensables. Et cet échange de vues va être plus que nécessaire et indispensable.

2:04

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

And without further ado, we will move to your opening statement. I will leave you the time necessary. And then we will have the game of questions and answers with our members. Welcome again.

2:35

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Madame la Presidente, it's going to be the last time that I will do so, as my eight-year mandate is coming to an end later this month. Alongside the annual report, we are publishing our formal response to the European Parliament's resolution on last year's report. These two documents are at the heart of the ICB's accountability to the Parliament and our ongoing dialogue.

3:04

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

I will start my remarks by reviewing economic and monetary policy developments during the year before discussing our broader activities and efforts to strengthen the economic and monetary union. The euro area economy experienced a moderate and broad-based recovery in 2025, despite a challenging global environment. Growth picked up to 1.4% for the year, underlining the resilience of the euro area economy.

3:31

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Growth was partly boosted by strong exports in the first quarter, reflecting front-loading ahead of anticipated higher U.S. tariffs. As that momentum faded, growth was sustained by domestic demand, which helped counter external headwinds in an environment of elevated uncertainty. A robust labour market, moderating inflation and the effects of our interest rate cuts, also supported the recovery.

4:00

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

The disinflation process continued broadly on track in 2025, with euro-area inflation averaging 2.1%, close to the ECB's million target of 2%. The progress made on inflation and a favourable inflation outlook allowed the Government Council to reduce the deposit facility rate further by 100 basis points to 2% by mid-2025, where it has remained since.

4:27

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

The gradual normalization of the Eurosystem balance sheet, which began in 2022, also continued. In 2025, we also concluded the assessment of the ACB's monetary policy strategy. It reaffirmed the symmetric 2% medium-term inflation target and recognized the importance of an appropriately forceful or persistent response to large, sustained deviations from the inflation target in either direction.

4:54

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

The assessment also underlined how important it is for our monetary policy deliberations.

5:00

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

to consider not only the most likely path for inflation and growth, but also the surrounding risks and uncertainty, for example, using actively different scenarios. The ECB remains focused on its mandate of price stability. The current economic situation is highly uncertain in light of the war in the Middle East, and energy markets remain extremely volatile.

5:24

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

The Governing Council, which continues to follow a data-dependent meeting-by-meeting approach, decided to keep interest rates unchanged at its latest meeting last week. We will monitor developments carefully to deliver on our mandate. Beyond monetary policy, 2025 was also a year of important progress in strengthening the economic and monetary union. Let me highlight three areas where the ECB, we believe, made a meaningful contribution.

5:53

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

First, the ECB continued work on the payments and market infrastructures of the future. The ECB advanced to the next phase of the Digital Euro project. This phase focuses on technical readiness, market engagement, and the legislative process and aims to ensure the ECB is prepared for a pilot exercise in 2027 and a potential first issuance in 2029.

6:18

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Work also advanced on a modern cash framework on a new series of euro banknotes, reaffirming the ECB's commitment to cash as a safe and inclusive payment method.

6:29

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

In parallel, the ECB continues to work on a strategy to enable tokenized European financial ecosystem. It consists of two initiatives, APIA, which is exploring how to create the necessary architecture, and PONTENS, which aims to enable the settlement in central bank money of wholesale financial transactions based on distributed ledger technology, DLT.

6:53

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

This strategy supports efficiency and innovation, strengthens the EU's strategic autonomy, and creates an opportunity to design integrated market infrastructure from the ground up. This provides strong foundations for deeper financial integration in Europe. Second, a robust regulatory framework and the Savings and Investment Union.

7:14

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Both are crucial for ensuring financial stability and channeling capital to productive investment, which supports the smooth transmission of monetary policy. The ACB's contributions include opinions, analytical work, policy advice, and technical input, most notably on the European Commission's proposals on the Savings and Investments Union. Looking ahead, it will be important to remain ambitious, particularly on the market integration and supervision package, and pursue the completion of the banking union.

7:44

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Third, the simplification of the regulatory and reporting framework.

7:48

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

I had the honour to participate in the Covenant Council's High-Level Tax Force on Simplification, which proposed streamlining the European Prudential Regulatory, Supervisory and Reporting Frameworks for Banks, noting that simplification efforts should preserve the current level of resilience. This conclusion served as input to the Commission's forthcoming report on the competitiveness of the banking sector.

8:15

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

All these contributions show that the ECB is moving forward with purpose, building a strong, secure and prosperous economy for Europe. Allow me to conclude. Since the start of my mandate in 2018, the euro area has experienced major progress, as well as very significant challenges.

8:34

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Through all of this, two main things have struck me. First, there is the resilience of our economic and monetary union. The euro has remained strong and attractive, as evidenced by Bulgaria joining the euro area this year and by public support for the single currency reaching record levels.

8:54

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

And second is the importance of the relationship between the ECB and the European Parliament, where independence is matched by accountability. I am totally confident that my successor, Governor Boris Djokic, will continue to cultivate this important relationship.

9:10

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

You can rest assured that whatever the future may bring, the AC Bill will remain firmly committed to its mandate of price and financial stability, a foundation of Europe's prosperity and strength. I now look forward to your questions. Thank you very much. Thank you, Mr. Vice President. Now we'll give the floor for one minute and a half to Fernando Navarrete for EPP.

9:38

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Thank you, Presidenta. Mr. Vice President, welcome once more to this committee and for the last time. And therefore, today I want to thank you for the interaction of all these years and for the rendition of accounts. And also, let me in the name of my own and of the group, also for the work that has developed.

10:00

S… Speaker 3 (20260504-1500-COMMITTEE-ECON Original Teil 1)

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10:20

S… Speaker 3 (20260504-1500-COMMITTEE-ECON Original Teil 1)

And the best has been that we have not fallen in complacency. That, from that episode, have been extracted lessons. And there has been a revision of the strategy of political monetary policy, as you have mentioned. So, I would like to ask you exactly what have been those lessons of the previous episode inflationary, which now believe that are especially useful to, even so, improve the capacity of response.

10:56

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Thank you very much for your kind words. Let me say something with respect to these eight years. I have a sort of two different feelings that are a little bit at odds. The first one is that time flies. But the second one is that when you look at the world...

11:15

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

today is very different from the one that we had eight years ago. So it's a sort of a contradiction between how rapidly time flies and the kind of events and challenges that we have been facing over the last eight years. Going to your concrete question, I think that the situation in 21-22 is very different from the one that we have now. In 21-22,

11:43

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

We had the pandemic. We had the reopening of the economy. We had a very expansionary fiscal and monetary policy. Remember, you know, Teltro. Remember, you know, PEP. Remember, you know, the fiscal deficit went to something close to 7%. And afterwards, we had the reopening of the economy and we had the invasion of Ukraine. And I think that, you know, this sequencing of events, you know, was, you know, quite unique.

12:14

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Now we have the conflict, the war in the Middle East. That's something that is having an impact on energy prices, something that is quite obvious. It's a supply-side shock that is going to reduce growth and to increase inflation. But monetary policy is in a totally different situation, and fiscal policy as well is different from the one that we had in 2021 and 2022.

12:41

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Having said that, well, you know that last week we decided to keep interest rates, to stay put. I think that the idea is to gather more information about the evolution of the conflict, that is an exogenous variable that we do not control, that we do not have under our control, and simultaneously we will have new projections. My personal view is that perhaps the supply side shock,

13:11

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

has been reflected more rapidly on inflation indicators than on growth indicators. Well, we had the growth rate of the first quarter, the flash estimate, 0.1. But my impression, my view is that in order to know what's going to be the impact of the conflict on growth, we will have to wait a little bit longer.

13:34

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

We have some leading indicators, some soft data. For instance, you know, sentiment of consumer that really the evolution was very, very, very negative. So we will have to wait a little bit more. So that's why I think that the decision of the governing council that was taken unanimously in the governing council, it was the correct one. We will have to wait until June. We will have more information. We will have new projections. And so, you know, in this...

14:02

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

kind of situations with a very complicated geopolitical situation. It's very important to have a cool head and to go data dependent a meeting by a meeting. That's going to be the strategy that we're going to implement. Thank you. For the S&D, Jonas Hernandez.

14:29

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Thank you very much.

14:58

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

razonablemente bien

15:00

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

So, thanks to my group and my own. In any case, and following a little bit the question of my colleague Navarrete, certainly the scenario that we face is quite different, as you said, in other parts, regarding the COVID crisis. In that moment, the risks were focused on the deflation of the economy, which allowed a monetary policy and expansion.

15:25

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

In fact, in some conditions very different to the current. And probably these tensions in the prices remind us something more to what we lived after the invasion of Ucrania by part of Putin.

15:39

S… Speaker 2 (20260504-1500-COMMITTEE-ECON Original Teil 1)

This is a crisis that goes like a camera lenta. It seems that we are televising a recession. The comissary Dombrowski is very vocal, talking about a possible situation of this inflation. But if we see the active in the stocks, they are still in maximums. The perception of the situation is not at the level of the risks that we face. And I would like to...

16:08

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Well, thank you very much again for your very nice words and kind words, totally undeserved. I think that you have made the points about the kind of disconnect between markets and the potential evolution and the outlook of the economy. I think that is something that is quite relevant. Valuations are very high.

16:38

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

They continue to be very high. Markets are discounted in a very benign scenario that the conflict is not going to last, that the economy is not going to suffer much, that monetary policy, the tightening, is not going to be relevant. I do not refer only to Europe. I refer as well to the U.S.

17:03

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

that investment in artificial intelligence is going to push the economy, that AI is going to increase the growth rate of productivity. So they are discounting a very benign scenario that perhaps if it is not...

17:26

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

If it does not become real, perhaps can give rise to a correction. And this is something that we have indicated in our financial stability reports. Simultaneously, with high valuations of markets, there are a couple of things that we have indicated about potential financial stability risks. The first one is fiscal policy.

17:53

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Fiscal space is very limited. The European countries, they have to implement a new defence policy with a lot of defence spending and, well, mitigating measures for, you know, the energy shock. You know, we have indicated in the past that should be very, very focused, temporary and very, very concrete and, you know, focusing on very concrete, you know, segments of the population.

18:20

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

And finally, the third risk that we have identified is non-banks. Now you know the risk.

18:26

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

A lot of noise with respect to private credit. The exposure in Europe of private credit is much more limited than in the US. But the interconnections and the liaisons between private credit and the rest of the financial system are becoming more and more complex and more and more intense. So these are the elements. But I think that here...

18:50

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Well, you know, the risk is that perhaps, you know, this very benign scenario that markets are discounting will not become real. We can have, you know, a sort of an accident and that could give rise to stress and tensions in the marketplace. So far, the evolution of markets has been very calm. Even if you look at the government bought market, well, you know, we have seen an increase in yields.

19:14

S… Speaker 1 (20260504-1500-COMMITTEE-ECON Original Teil 1)

and spreads have been more or less contained. But this is something that we will have to monitor and to look at very carefully because financial stability is one of the elements that can amplify the potential shock coming from the oil market and the energy market in general. Thank you. For ECR, Johan von Overfeld.

19:39

S… Speaker 3 (20260504-1500-COMMITTEE-ECON Original Teil 1)

Thank you, Chair. Mr. de Guindos, dear Louis, always good to have you here, unfortunately for the last time. But very good memories also from our time together, you know, in the Middle Ages when we were both Minister of Finance and dealing with some crises. I tend to disagree a little bit with my two colleagues.

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