We started our meeting by welcoming the new Vice Chancellor and Finance Minister of Germany, Lars Klingbeil, who outlined the main economic priorities of the new German government.
We continued with our biannual discussion with the chair of the Single Supervisory Mechanism, Claudia Buch, and the chair of the Single Resolution Board, Dominique Laboureix. They provided insights into their respective activities in the fields of resolution, preparedness, supervision and regulatory issues. I want to thank Claudia and Dominique for their work. Today’s discussion came at the right moment as we have recently experienced significant market events. They remind us that financial stability needs to remain at the core of our priorities, as it interacts with a lot of our work in areas such as economic resilience and competitiveness.
It is important to acknowledge the overall good condition of the banking sector of Europe. The capital and liquidity positions of banks, as well as their balance sheets, have strengthened significantly in recent years. And this progress is notably due obviously to the banks themselves but in particular to the efforts of supervisors and regulators in enhancing the resilience of our banks. That being said there are still a number of challenges that have to be actively addressed including digital transformation, cyber threats and climate change. We also need to continue to monitor the impact on the banking sector of global trade tension.
Our exchange confirms and indeed reinforces our dedication to further strengthening the banking sector and advancing the banking union. We need concerted efforts to fulfil our existing commitments including finalising the reform of the crisis management framework.
We then held an exchange of views on a range of issues relating to the European Stability Mechanism (ESM) in preparation for the upcoming annual meeting of the ESM in June, and the Managing Director of the ESM, Pierre Gramegna, gave an overview of the work that is underway. This was an opportunity to take stock of the current state of play and reflect on the broader context with a view to shaping a more structured dialogue next month at the Eurogroup and also at the ESM Board of Governors meetings. We discussed how we can ensure the ESM’s toolkit remains fit for purpose in light of evolving challenges. We also had an update on the ratification of the revised ESM treaty in Italy to deliver on commitments that all countries have undertaken. Today’s discussion was a valuable step in framing the work ahead and will support efforts to shape a common way forward.
We also welcomed our non-euro colleagues for two topical discussions. The first was a discussion stemming from the recent G7 meeting in Washington, which allowed ministers to take stock of global economic developments. All ministers agreed on the need to work towards reducing trade and geopolitical tensions. While monitoring the impact of trade uncertainty on the euro area economy, there will of course be an impact on growth. But I think there is also recognition that amidst all that is going on, the euro area’s resilience, stability and reliability are seen as strengths and increasingly as a safe haven for investors, innovators and of course for our own citizens. And while the external challenges that we face are significant, we will not lose sight of the opportunities to deliver on a positive and clear policy agenda that we have framed for the euro area.
It was in that spirit we turned our attention down to the digital euro. We took stock of the work of the Council, of the Commission, and of the European Parliament on the legal framework. There is good progress, but there are some areas that require further work. Meanwhile, the European Central Bank also continues its technical work. We agreed again that this initiative is crucial, given the changing geopolitical landscape and the importance of diversification of strategically important payment systems. The sense of urgency for this project is increasing for ministers. So we agreed to speed up work and aim to find compromises on the remaining issues as soon as possible. This means that the Eurogroup, in conjunction with the Polish and Danish presidencies, will continue its political engagement with this common European project.