HomeCBDCDigital Euro UpdatesConversation with La Repubblica

Conversation with La Repubblica

In an interview with Luis de Guindos, conducted by Tonia Mastrobuoni on 27 April 2021, the economic prospects for the euro area were discussed in relation to the ongoing pandemic. While the first quarter was weaker than expected, the pace of vaccination across Europe is gaining momentum, which is expected to have a major impact on the economy. Growth is estimated to be around 4%, and the second half of the year is expected to be very positive. The recovery plan presented by Mario Draghi for Italy is seen as crucial for the country’s future, as well as for the continent’s recovery. Draghi’s leadership skills and reputation have provided unity in the Italian Parliament, which is a positive signal for Europe. The NextGenerationEU plan is important to avoid large gaps between countries and stimulate potential growth in the medium term. It needs to be implemented quickly and accompanied by reforms to improve productivity and competitiveness. Cancelling public debt is not a solution as it would infringe on the Treaty and undermine the credibility of the central bank. The recent ruling in Germany regarding the “own resources” law is seen as an important step forward towards the issuance of joint bonds. The recovery of China’s and America’s economies compared to Europe’s recovery is not seen as a major risk, as Europe has implemented fiscal stimulus programs similar to the United States. Concerns about inflation and the strengthening of the euro are being monitored closely, and inflation is expected to rise temporarily due to temporary factors. The risk of excessive divergences between countries has been addressed through the recovery plan, which provides more funds for the hardest hit countries. The end of the pandemic and debt moratoria could lead to an increase in non-performing loans, but it is not expected to be as acute as initially feared. The possibility of a digital euro is being analyzed to benefit European citizens and the economy, and a decision on whether to initiate a project for its possible launch will be made in mid-2021.

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