The Kyriakos Pierrakakis invites Europe for dynamic action, underlining that the continent is at a critical turning point.

The need to shift the European strategy from passive defence to proactive shaping of the future was highlighted by the president of Eurogroup during his testimony to the Economic Affairs Committee of the European Parliament.

According to Pierrakakis, “the world is changing rapidly and we are moving to a new world order“, which requires the European Union to evolve into an entity that decides its fate by boxing.

Because of the resilience the eurozone has shown in recent years, from the pandemic to the energy crisis, Kyriakos Pierrakakis warned that current and future challenges require a more proactive attitude – to create space for growth. He said that current levels of growth are not sufficient to address future challenges, such as demographic pressures and issues of productivity, calling for broader reforms to strengthen competitiveness and European sovereignty.

“Resilience is defence, but now we have to go on the offensive“, aiming for a stronger and more autonomous Europe, he said.

He placed particular emphasis on energy, noting that “energy means sovereignty, security and protection of citizens”, and did not rule out significant economic repercussions from the war in the Middle East. He said recent data show increasing inflation and slowing economic activity, with uncertainty becoming “the new normal”.

In the field of economic policy, he stressed that relief to households and businesses is necessary, but “measures must be targeted and temporary”, giving priority to protecting the most vulnerable. “No European strategy will succeed if it is not socially just,” he stressed, adding that fiscal flexibility exists but should be used carefully and within agreed rules.

Referring to the conclusions of the International Monetary Fund, he noted that untargeted measures often benefit higher incomes more, confirming the need for better policy design. He also stressed that according to the IMF, EU options after 2022, such as diversification of energy sources, have already reduced the impact of the crisis.

He also made a special reference to the digital euro, stressing that it is a crucial tool for monetary sovereignty and the resilience of the European payment system. “Every month counts”, he noted, stressing the need to speed up procedures so that Europe does not lose the edge in the digitisation of the financial sector.

He noted that the global financial system is undergoing a rapid digitisation phase, with different approaches from major economies. Referring to the US, he noted that it is not moving to a digital dollar, but relying on stablecoins, while China is going in the opposite direction, exclusively promoting a digital currency. In this context, he stressed that the European strategy should be based on a public infrastructure, with “the digital euro core”, which he said could strengthen the international role of the euro, while allowing private innovation to develop around it.

He particularly emphasised the fact that today “95% of stablecoins are pegged to the dollar and less than 1% to the euro”, which, he stressed, makes the need to promote the digital euro even more urgent. “If we don’t move quickly, we will miss a huge opportunity to strengthen the international role of the euro,” he warned.

Referring to artificial intelligence, he stressed that Europe should focus on strengthening its technological dominance, noting that we often “overestimate the present and underestimate the future”. He said the key challenge is the need for global coordination in technology governance at a time when multilateral coordination is being tested.

In conclusion, Kyriakos Pierrakakis cautioned that the stakes are very high and expressed hope that international cooperation will move forward in a timely manner without the need for a negative event to precede it.