Klaas Knot: You can't always get what you want, but after 25 years of EMU, we just might find we get what we need

Speech by Mr Klaas Knot, President of the Netherlands Bank, at a seminar, organised by the Netherlands Bank and Bruegel, Amsterdam, 9 November 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning everyone, welcome to the joint Bruegel and DNB conference on the future of the EMU. It is not often that I get to discuss these important matters with such a broad range of experts. In my speech today, we will dive into the functioning of the EMU, now almost 25 years old. I will discuss three conditions for its well-being as well as three suggestions for the way forward. My contribution today also contains some sweet sounds of heaven, hence I would like you to listen carefully.

But first, let's recall why we have the Economic and Monetary Union. After all, having a common currency is not an end in itself. I like to think that an important reason to share a common currency is to achieve a strengthening and convergence of our economies. This should lead to deeper economic ties, contributing to greater prosperity and stability for all in Europe. Economic and political stability, but I will focus on the former.

The question then is, did the EMU deliver on bringing greater economic prosperity and stability in Europe? When looking at the union as a whole, my answer would be: yes. The EMU anchored its members more firmly in the European project, and facilitated the deepening of the internal market. One supporting piece of evidence comes from the estimated impact of the EMU on trade. [Figure 1] A recent DNB study suggests significant trade benefits from EMU-membership. These positive effects appear not only for trade between EMU countries but also for exports to other EU countries and perhaps surprisingly – even for exports to the rest of the world.