We are joined by the Dutch finance minister, Sigrid Card.
Thank you so much. I know you have been hectic for you the
past 48 hours. First of all, we appreciate your time on
Bloomberg TV. And then, well, the IMF is coming to an
end. To me, there's two big takeaways is that
one is the global outlook. They point to downside risks and then
there's potential tensions over trade because the geopolitics are coming to
the front for it. Do you feel perhaps a little bit gloomy
yourself or actually is this a way to focus everyone's priorities?
I think it's the latter. It's a way to focus.
It's always, of course, important to have the IMF outlook that sort of should
sharpen our minds. And then the debates helps you see again
the different perspectives, because it depends very much if you speak from a
European perspective or whether you're in a country which is highly indebted in
the global south. These things matter.
They're big differences. But I think I'm I'm not more optimistic
or pessimistic. I'm more alert given the fact there's so
many variables and so much uncertainty. We need to sharpen our minds.
We need to ensure that the policy instruments we have are properly used
and applied and we need to ensure that we collaborate and we strengthen our
global partnership. And here you've brought up all of the
questions that I want to ask. And one single answer, and I think
you've pinpointed three things that are very key.
First, there is big divergence going on in the world.
But specifically, when you look at Europe and we look at the euro area,
obviously we're dealing with very different economies.
How do you see the outlook? Overall, there is this idea.
The year started very well for Europe. The winter from hell did not manifest.
And we saw the turbulence in the banking world picture overall, not European
banks specifically, but a lot of that fit into the European narrative.
How do you see the outlook overall for Europe?
Well, I think heroes, where there's a challenge now and this for all of us as
European finance ministers to see if we can make progress on the banking union
Capital Markets Union. A lot of these dossiers have been kept a
sort of and not in the abyss, but rather we were unable to reach the next steps
and consensus on that front. Secondly, I think it also forced us to
really start the discussions in the negotiations when the commission pushed
through with the proposal on the reform and the modernization of the Stability
and Growth Pact, because fiscal rules need to be fit for the challenges that
we face. And I think not doing so actually
undercuts the unity of purpose that we need to demonstrate as a European Union.
Also at a political level. And all of us together, of course, are
hoping that perhaps infuses momentum into this.
I don't wanna put words in your mouth, but that's a perspective that I take
from you, that hopefully this gets everyone focused to deal with issues
that we know have been pending for years, some of them.
Do you believe specifically that when it comes to the fiscal framework, things we
know, we always gets heated between the different countries?
When do we get a proposal, a consensus for fiscal rules that are fitted for a
modern European economy? Some say at this point they're in need
of change. But how much change?
Let me take one step back. I'm not only hopeful.
I think it's incumbent upon all of us as finance ministers that are central to
all of government's decisions, that we seize the opportunity in a potential
difficult situation to really to really focus and to also sharpen the
instruments that we have and render them fit for purpose.
So it's not hope. I think it's duty.
Secondly, I think the commission is intending and I sincerely hope that they
will towards the end of this month to submit the first proposal on the new
Stability and Growth Pact. And I think we need to start the
conversation. We know that there are different views,
there are different opinions on elements of what could be debt reduction, the
national pathways, the metrics, the safeguards, the oversight.
But we need to negotiate. I mean, the fallback is always the old
as GP. To my mind, I don't think that's a good
solution because it hasn't worked. And we've seen great divergences in
actually debt accrual by countries and very little movement in terms of the
reduction. So let's really fix this and let's start
the negotiation. And obviously for an international
audience, that means our rules that some have criticized for years or perhaps
focus too much as you see on debt reduction, but have not perhaps
modernized themselves or even focus on growth.
And that needs to be as equally important in this equation.
You also have inflation. How much do you worry about inflation?
In Europe, we've seen the European Central Bank go very hard on this, the
fastest increase in rates on record. But inflation is still a problem,
especially core inflation. Is that something that keeps you up at
night, perhaps? No,
I don't stay up at night. I think you need to sleep as well to
have a some kind of acute reaction to the problems.
But more importantly, core inflation is here to stay for quite some time, at
least till 2025, we understand. So it's important that the ECB and other
central banks sort of maintain both their perspective on price stability as
well as US governments on what should be elements of financial stability.
Those two need to go hand-in-hand. I don't think there's an easy tradeoff.
Ultimately, core inflation will affect citizens and all of us again need to
determine which levels of support need to be provided, but that they are timely
and that they are targeted and temporary.
That's really a critical question also for us in the Netherlands.
We've produced a very generous support package last year, covering this year,
but we cannot sustain it, nor should we want to.
We need to focus on the most vulnerable and we need to exit from the broad range
of support measures that we had adopted because the situation is different and
the presence of the Dutch National Bank really refers.
And I agree fully with him to the risk of a compensation society.
So we need to also keep our eye on the ball in that regard.
And that was the message also from the IMF.
The fiscal now can not impede the monetary policy and clash in that way.
I wonder and I know you're when you're European and you're a politician, you do
not talk about the European Central Bank.
There's a big separation between them. But I do want to ask you, do you have
faith that the gap will get the right path to bring down inflation?
When you look at the European Central Bank, do you go, yes, we have faith they
will get to the right consensus? Absolutely.
And that's all I know you're going to say.
However, as I am, I I admire and respect Madame NIKKEI greatly.
I admire the board. And I think they will do what's right.
They they face very difficult moments of decision.
And I think ourselves, as ministers of finance, also need to do what is
incumbent upon us. We cannot expect the ECB to solve
matters that finance ministers ought to address.
But the ECB and its independence needs to be safeguarded because otherwise I
think we risk politicizing what should be very sound decisions.
It's been set within it's been established with an independent mandate.
And I will always continue to stand for that independence.
And we're running out of time. But I have two final questions for you.
There has been a lot of talk about China and trade.
When you look at China, is it a partner, a rival?
Is that a country that fundamentally does not share the values that are key
to Europeans? So therefore, you have to do risk the
most that you can? It's a very tricky question, but how do
you see the Chinese playing into this? I think from a European Union
perspective, we've always established that can be a partner, can be a system
rival, and we can sort of selectively collaborate.
It's always one of the three where we want to make sure is, of course, we
safeguard our own interests and it's neither risking for us.
I think it is actually globalizing, but making sure that we keep our eye on the
ball of our strategic assets, that we do the right investment screening.
And of course, that we harness our own potential.
And I think a strong Europe as a strong ally alongside the US is really
something we need to make sure we invest in and we provide for.
And just very briefly, are you disappointed there was no joint
statement, again, because of Russia? Well, I wasn't expecting it, but it's
always disappointing. But I think more importantly, we need to
ensure that the international community, the strong voices, remain united and
that we do whatever it takes to ensure that Ukraine gets its territorial
independence and integrity back and that this war ends as soon as possible based
upon the Russians to achieve that. And we need to stand by Ukraine for
whatever it takes.