Europe 'must consider its place in the world', ECB's Lagarde says
At a time when "uncertainty abounds" and the conventional wisdom in diplomacy and economics was being "challenged", Europe "must consider its place in the world and reset its ambitions", argued the European Central Bank's new President.
In prepared remarks for a speech delivered at the Frankfurt European Banking Congress, ECB chief, Christine Lagarde called on authorities to complete the single market in services and the European and Monetary Union, with the latter meaning an increased role for fiscal policy, or government spending.
Those would bring allow monetary policy, the ECB's remit, to achieve its goals more quickly and fewer side-effects, she said.
It would also help those national economies that needed to rebalance to do so more easily and in turn create greater economic resilience against any downturn.
According to Lagarde, new studies pointed to a potential gain from full implementation of the European Union's Services Directive in the order of €380.0bn, while completion of the single digital market alone would add over €170.0bn annualy.
Lagarde was careful to note the need to avoid generating any so-called 'moral hazard' by excessive public sector spending, which would result in undersaving and too much risk-taking.
Nevertheless, if EMU was not completed, the result would be the opposite, oversaving, too little risk-taking and less resilience.
"We have a unique possibility to respond to a changing and challenging world by investing in our future, strengthening our common institutions and empowering the world’s second largest economy.
"All of this would be a game changer, not just for our own stability and prosperity, but for that of the global economy, too.
"It does require us to think differently about Europe. It will almost certainly not be easy. But as St Francis of Assisi once said, "start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible."