Mugur Isărescu: Economic governance in the European Union
Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the
Conference "Economic Governance in the European Union", jointly organized by the
European Commission, the Ministry of Finance and the National Bank of Romania,
Bucharest, 10 June 2011.
* * *
Ladies and Gentlemen,
Distinguished audience,
It is a pleasure be the host of the Conference on "Economic Governance in the European
an event jointly organized by the European Commission, the Ministry of Finance and
Union",
the National Bank of Romania.
We are glad to welcome you all and our special guests: Mr. Gheorghe Ialomiţianu - the
Romanian Minister of Finance, Mrs. Elena Flores, Director for Policy Strategy and
Coordination in the European Commission's DGECFIN, Mr. Theodor Stolojan, Member of
European Parliament and former Prime Minister of Romania, Mrs. Iuliana Dascalu, Director
in the Finance Ministry of Romania, Mr. Hans Martens, chief executive of the European
Policy Centre Think-tank and Mr. Daniel Dăianu, Economics Professor, former Member of
European Parliament and Finance Minister of Romania.
A special note of thanks to my colleagues Deputy Governor Cristian Popa and the
Chief Economist Valentin Lazea, who, together with our special guests, have responded to
the challenge of debating a hot topic.
In these challenging times, economic governance was brought to the spotlight by the
recent global economic and financial crisis.
Governance may be seen as the manner in which power is exercised in the management of
a country's social and economic resources for development. We all know that good
governance involves setting adequate policies, programs and regulations, which then have to
be translated into legislation. As I often say, sustainable development hinges on the
consistency of economic policies - there is no substitute for consistent, sound and
stability-oriented economic policies.
and these are
In this context, institutions are central to the way a country is governed
the formal and informal rules in a society. As the Nobel Prize winner Douglas North
pointed out "the formal rules are set by the state through laws and regulations, while the
informal rules come from the culture, history and experience of each society".
Only in the last 10-15 years most economists have discovered good governance - with its
four pillars: transparency, accountability, predictability and participation - as a major
determinant of economic growth. Thus, economic governance implies the need to ensure
stable, transparent and predictable rules that encourage competition and fair access to public
services. It is achieved through a country's public and private sector institutions and the civil
society.
Moreover, the recent international crisis has underscored the need for an in-depth
reform of economic governance at both European and global levels. As the European
Central Bank president, Mr. Jean-Claude Trichet has recently underlined "the international
interdependencies are too large for purely national or regional rules to be optimal and there
is a clear need to strengthen global governance, in particular in the financial field".
In the case of the European Union, the crisis has exposed fundamental weaknesses of the
European economy, revealing growing internal imbalances. The functioning of the European
Monetary Union has been under particular stress as the existing surveillance procedures
proved to be not comprehensive enough.
Therefore, more effective economic governance in the European Union and the euro area is
seen as achievable through five main pillars: fiscal discipline, broader economic
surveillance, closer coordination, a robust framework for crisis management, stronger
institutions and rules-based decision making.
At this point, let me say that just recently the European Union has taken important decisions
to ensure that Member States coordinate their economic policies more closely. The new
economic governance is therefore based on three main responses to the crisis:
• reinforcing the common economic agenda with closer European Union surveillance
• safeguarding the euro area stability
• and repairing the financial sector
As a result of these decisions, the EU's interdependent economies will be better placed to
chart a path to growth and job creation.
To conclude, I would like to emphasize here that economic governance is a topic that
concerns us all. I would say it is all about discipline - particularly fiscal discipline, and
a changing culture.
I am sure that, under the umbrella of this complex topic, all these issues are full of substance
so that I strongly encourage participants to debate on the challenges the European Union, in
general, and countries like Romania, in particular, face when it comes to economic
governance.
I wish you success and invite Mr. Gheorghe Ialomiţianu, Romania's Minister of Finance, to
deliver his address.