Some 400 experts from banking, industrial and political circles, international organisa- tions, academic institutions and the news media attended the EIB’s fifth annual Forum, held in Paris on 21 - 22 October to discuss prospects for the new euro markets. Still a very young phenomenon at the time of the Forum, the theme was chosen to highlight the new currency’s importance for the success of Economic and Monetary Union. The Forum’s first session explored the macro-economic context, including the impact of monetary union on growth and employment, an issue that echoed the 1998 EIB Forum on the relationship between investment and employment. The first session also con- sidered the potential impact of ongoing financial restructuring on Europe’s global com- petitiveness. Presentations and discussions on the Forum’s second day focused on the need for restructuring of banks and new developments in the role of capital markets. In general, speakers tended to highlight the euro’s strong points, although qualifying their observations with the rider “not good enough - could do better”, and pointed out that the euro’s introduction could not take all the credit for the revival of economic growth in Europe. In the corporate sector, the new unified euro market was seen as giving a particular boost to the process of restructuring and mergers. Some speakers noted a trend for mergers and acquisitions to become increasingly cross-border initiatives, giving rise to large European groupings capable of holding their own against international com- petition. On capital markets, the euro had brought exceptional growth in euro- denominated bonds, especially those issued by large European corporates funding ambitious development strategies.
However, speakers also observed that Europe still had to establish a single financial market comparable in size to that of the United States. Too many fiscal and regulatory
21 October 1999
Opening of the Forum:
Sir Brian Unwin,President of the EIB and Chairman of its Board of Directors
“The euro area’s challenge: a new dynamic development”
Chairperson: Wolfgang Roth, EIB Vice-President
•Giuliano Amato, Minister for the Treasury, Budgetary Affairs and Economic Planning; EIB Governor for Italy
•Felix G. Rohatyn, US Ambassador to France, former Managing Director of Lazard Frères and Company, New York
•Jean-Pierre Tirouflet, Chairman and Chief Executive Officer, Rhodia (France)
•Richard Summers, Director Continental Europe, 3i Group plc (United Kingdom)
•Jean-Jacques Laffont, Professor of Economics, University of Toulouse (France) and former President of the European Economic Association
Forum dinnerwith guest speaker Pedro Solbes Mira, Member of the European Commission responsible for Economic and Monetary Affairs
Sir Brian Unwin opening the EIB Forum in Paris
barriers still needed to be dismantled in Europe, before European corporate en- terprises could benefit from the kind of fiscal and social level playing fields that existed in the US. At the same time, size in terms of national grouping or cross- border mergers in the banking sector was no guarantee of profitability. Mergers with a trans-European dimension were only appropriate if anchored in highly specialised areas, with a strong international bias. It was also underlined that al- though a suitable macro-economic and monetary framework had been put in place, the requisite matching structural reforms had still to be adopted. Guest speakers were the European Commissioner for Economic and Monetary Affairs, Pedro Solbes, and Dominique Strauss-Kahn, then French Minister for Economic, Financial and Industrial Affairs and EIB Governor for France. Both took an optimistic view of the euro’s future. Dominique Strauss-Kahn highlighted in particular the euro’s stabilising influence, which had mitigated the damaging ef- fects of the 1998 and early-1999 international financial crisis. The euro had also given the European Union a new impetus towards full employment. To sustain this development, the Member States had to continue reducing public expendi- ture, inflation and interest rates in line with the Maastricht Treaty criteria. Given a favourable economic climate, Mr Strauss-Kahn was confident that the EU Mem- ber States would meet the Treaty’s public expenditure criteria.
Commissioner Pedro Solbes forecast that Europe would enjoy a lasting period of sustainable economic expansion and with it the creation of employment. He also underlined that the Member States would have to continue to accept the con- straints of the Growth and Stability Pact. He strongly favoured the entry of the four “Pre-In” Member States into the euro area. However, monetary union would not end with just the 15 Member States, as the candidate countries were also committed to entering EMU and adopting the euro. This would be a gradual progressive process, not automatic with their accession to the European Union. Following accession, a transitional period would probably be required before the new members would be able to meet the Treaty conditions.
Closing the Forum, EIB Vice-President Francis Mayer emphasised that the euro was not an end in itself. While it was already proving to be a considerable financial and technical success, it needed to build on this achievement by bringing stability and peace to the peoples of the European Union and its neighbours to the east and south. This would be the yardstick over the medium term with which to measure the genuine success of the euro.
22 October 1999
“Changes in the euro area’s financial sector”
Introduction byAlfred Steinherr, Chief Economist, EIB
“The restructuring of banks”
Chairperson: Massimo Ponzellini, EIB Vice-President Speakers:
•Marc Antoine Autheman, Chairman of the Board of Management, Crédit Agricole Indosuez (France)
•Artur Santos Silva, President, Banco Português de Investimento (Portugal)
•Maurizio Sella, Chairman of the Italian Banking Association; Managing Director and General Manager, Banca Sella S.p.A. (Italy)
“A greater role for capital markets?”
Chairperson: Ewald Nowotny, EIB Vice-President
•Gerd Häusler, Member of the Board of Managing Directors, Dresdner Bank AG (Germany)
•Fernando Abril Hernández, Chairman of Directories Unit and Member of the Management Committee, Telefónica Group (Spain)
•Rodolfo Bogni,Member of the Group Executive Board, UBS AG (Switzerland)
Dominique Strauss-Kahn, Minister for Economic, Financial and Industrial Affairs; EIB Governor for France
Francis Mayer, EIB Vice-President