At the start of the European Union’s legislative cycle, the finance ministers of the euro area countries will hold a strategic discussion on Monday 20 January, the day of Donald Trump’s inauguration as President of the United States, to assess whether the Eurogroup should refocus its work priorities.
The key topics to be discussed will be: “capital markets, banking union, the digital euro and the various facets of economic competitiveness”, said a European diplomatic source on Thursday 16 January. This discussion are expected have an impact on the ministers’ work programme for 2025 and 2026.
On the fiscal front, the ministers will shortly be discussing the proposal for a recommendation on the fiscal stance at euro area level for 2025. In December, they had already recommended that this guideline be “slightly restrictive”, at 0.25% of GDP, in line with the European Commission's initial proposal (see EUROPE 13542/4).
On Tuesday 21 January, the Ecofin Council will be asked to approve the recommendations relating to the medium-term fiscal-structural plans of EU countries and those specifically aimed at certain countries subject to the excessive deficit procedure.
The new French Finance Minister, Éric Lombard, will present the new budgetary and economic priorities of the ‘Bayrou’ government on the basis of a path for consolidating public finances which now provides for a reduction in the French public deficit from 6.1 to 5.4% of national GDP between 2024 and 2025 (see EUROPE 13557/24).
Digital finance. The Eurogroup will also discuss the impact of technological innovation on the wholesale payments sector.
The innovation, allowed for by ‘asset tokenisation’, makes it possible to speed up transactions and reduce costs, noted this source, believing that the developments underway could make it easier for SMEs to access the capital markets. This source also raised issues of sovereignty for the euro area.
The ECB will inform ministers about its work with the private sector on how to use these innovations to settle transactions. In addition, an expert from the Bank for International Settlements will present the projects launched by the organisation.
This ministerial discussion will be linked to that on retail payments, notably through the project to create a digital euro that the ECB is piloting. The latter will stress to the ministers the importance of such a project for the euro area while some countries have expressed reservations about the need for a digital euro, slowing down legislative work at European level.
This European source warned of the “vacuum” that would be created by the absence of a central bank digital currency in the euro area, at a time when digital payment solutions are inexorably expanding, mainly to the benefit of operators outside the EU. “It’s not just an economic issue, but a broader security issue” linked to payment infrastructures, the source pointed out. And to hope that the ministerial discussion will respond to the “scepticism” expressed and give “fresh impetus” to the legislative work needed at EU level to enable the ECB to ultimately decide whether to introduce a digital euro. (Original version in French by Mathieu Bion)