President of the Republic addresses the ECB Board of Governors

Ljubljana, 3.10.2012  |  press release

The President of the Republic of Slovenia, Dr Danilo Türk, last night attended as a guest of honour the gala dinner prior to the meeting of the Board of Governors of the ECB in Slovenia.

In his address, President Türk stressed that in Slovenia, we are intensely aware of the importance of the deliberations and decision-making of the Board of Governors of the ECB – both for the eurozone and for the European Union project as a whole. He welcomed the determination expressed by the Board’s President, Mario Draghi, to “do whatever it takes to preserve the Euro as a stable currency”, and the decisions of the Board of Governors which assured the survival of the euro.

The President stated that the European Union had reached a fork in the road at which it will either demonstrate its ability to continue the process of closer integration with a number of practical steps necessary to solve its problems or will set into a dangerous state of stagnation that would mean its weakening and decline. According to the President, Europe has to put its house in order, and this task will certainly not be an easy one.

“The austerity measures are both necessary and logical, given the need to reduce the budget deficits. They have to be handled carefully and within the right proportion. The people at the receiving end of austerity measures do not easily accept the rationale for these measures that in many cases have little to do with governments’ overspending and have, in most cases, become necessary to remedy the excesses of the financial sector or the bursting of the construction bubble. Let us not forget, the will of the people is the sole source of legitimacy of power in democratic societies. The needs and concerns of the people have to be taken seriously,” said President Türk.

He added that besides austerity measures, ways must be found to stimulate growth and employment and adopt structural reforms such as the pension system reforms and labour market reforms.

President Türk recalled that, within the European Union, it will be necessary to address some fundamental questions, inter alia the question of whether durable solutions should be sought only in the change of conduct of the debtors alone or whether the time has come to create a European currency system in which both creditors and debtors share responsibility for maintaining stability.

The President also stressed the importance of cohesion funds. As he explained, their importance reaches beyond their immediate financial effects, since they are a necessary instrument of trust in the European Union. We should not forget that the European Union is facing a crisis of credibility and legitimacy, pointed out the President.

According to the President, national and European policy elements are necessary to provide the right kind of economic and political environment in which European financial construction can progress.

“European citizens are following the current discussion on the formation of the banking union with keen interest. Sometimes they are puzzled by the news of changing interpretations of earlier agreements, for example those related to the much discussed banking union. They are becoming familiar with such technical financial concepts as “outright monetary transactions”, “enhanced supervision” and “improved risk management”. A new and critical public is emerging before our eyes, a public interested in the organisational arrangements of the future banking union and in the modalities of new supervisory mechanisms,” commented President Türk.

According to the President, this is an important development, which is moving the world of high finance out of its ivory tower into the daylight of public attention and generalised and often politicised discussions. This development, interestingly, strengthened the case for genuine independence of national central banks and of the European Central Bank and it also strengthened the quest for their exposure to public scrutiny, added President Türk.