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Report on the 2014 conference


After a brief welcome by György Matolcsy the year 2014 Lámfalussy Lectures professional conference commenced with the presentation of Viktor Orbán on the dilemma of the introduction of the euro. The Governor of the Hungarian central bank announced already at the start of the event that the first awardee of the Lámfalussy Award, established a year ago, was Ewald Nowotny.

 Opening address of Prime Minister Viktor Orbán

The prime minister stated that the government and the central bank had to cooperate, but there must be a clear-cut segregation of powers on the base rate and exchange rate issues. Namely, he emphasised that these belong to the sole competence of the central bank. The prime minister urged a new European Union strategy necessary for competitiveness, which – in his view – requires the financial stability of the euro area, as well as the providing of the extra-euro area countries with the fullest economic policy freedom. The prime minister is of the opinion that Central-Europe may become the engine of the European Economic Area's growth; however, this requires the maintenance of the strong ties to the German economy in the future as well. In his view the concentration of powers is also essential for the position of the engine of growth. As an example he mentioned the Austrian and the German grand coalition, as well as his government's two-thirds majority, in the absence of which the policy of renewal would have failed. Accordingly, in the end he encouraged the voters not to ignore the categories of political power and the ability to govern, as the successful or unsuccessful economic policy of the future governments may depend on this. As regards the accession to the euro area, being the main topic of the conference, Viktor Orbán said that first we should get closer to the euro area in the real categories of the economy to facilitate an "intelligent conversation" on the financial accession.

Presentation of Ewald Nowotny, the Governor of the National Bank of Austria: European Monetary Union: Past, Present and the Future

In his presentation the Governor of the Austrian central bank emphasised that the relationship between the Austrian and the Hungarian central banks was tight, but – as he stated – a tight relationship is not necessarily a simple one as well. As he mentioned, in the recent past the two central banks faced a few difficult issues, but none of those were a matter of principle, but rather a practical issue. "History teaches us that differences of opinion may exist, but we should never regard each other as enemies" – he said. Nowotny argued in favour of the multi-speed Europe: it must be facilitated at least in the medium term that the able and willing member states make a progress and tighten the cooperation. As the member of the Governing Council of the ECB he stated: the ECB played a major role in fending off the effects of the economic crisis. As he stated, without the intervention of the ECB the consequences of the crisis would have been even more disastrous not only in the euro area, but also in the EU member states outside the euro area.

Presentation of Christian Noyer, the Governor of the French central bank: Why the Economic and Monetary Union needs a banking union

According to the Governor of the French central bank one of the most important lessons learnt from the past period is that the European Union was not perfect and coherent. The problems occurred in the heart of the euro area. In his opinion the creation of the European Banking Union will immensely improve the transparency of the large European banking groups and at the same time also strengthen the consistent and clear management of the potential bank resolutions.

Presentation of Ilmars Rimsevics, the Governor of the Latvian central bank: Latvia and the Euro

Latvia is once again the fastest growing country in the region and it was able to perform so earlier as well – said the Governor of the Latvian central bank. As he said, the sceptics also often add that Latvia grows fast indeed, but has to pay a huge price for that. Rimsevics believes that his country has already regained the previous output level, thus it can be stated that the introduction of the euro in Latvia and the accession to the euro area was clearly advantageous for Latvia. The credit rating agencies upgraded the rating of the country already upon the announcement on the joining to the euro area; on the other hand, it is an unquestionable fact that at the start of the crisis Latvia had the lowest government debt, while now it is above 40 per cent. And this is certainly a very important aspect, and as such they will focus on this in the coming period – said Rimsevics.

Presentation of György Szapáry, Ambassador of Hungary to the United States, former Deputy Governor of the Magyar Nemzeti Bank: Central bank responses to the crisis, what are the risks of exit

The central banks assumed a risk with the monetary expansion, but perhaps the risk "idleness" was even higher – evaluated György Szapáry the central bank's recent reactions. He talked about the change of the monetary policy direction seen in the major central banks of the world (particularly at Fed) and the related risks, and noted that in his opinion the shrinking liquidity may once again entail an increase in the money- and capital markets' aversion to risk.

Convergence and Adjustment in the European Monetary Union – José Luis Malo De Molina, Director General of the Spanish central bank

In connection with the competitiveness processes the Governor of the Spanish central bank noted that finally the situation in Spain was improving and there was also some progress in wage competitiveness. At the same time he acknowledged that the adjustment demanded a huge growth sacrifice from them and the 26 per cent unemployment rate was extremely worrying.

 These issues must be addressed in a timely manner, otherwise new problems may surface – believes De Molina.

The Euro from the Russian perspective – Igor Dmitriev, Director of the Russian central bank

Since its creation the euro has played a very important role in the economic interaction of the entire world, with Russia not being an exception – emphasised the Director of the Russian central bank in the beginning of his speech. The euro area is one of the most important trading partners of Russia, and this was not changed by the recent crisis either; moreover, the euro also has a prime position in the structure of the Russian external debt – stated the Russian central banker, thereby emphasising the impact of the euro area's monetary policy on Russia.

 However, compared to these very strong economic relations – which he listed in length – the international relations are rather weak – established Dmitriev as a closing remark.

 In his closing speech György Matolcsy emphasised the importance of the central bank independence and summarised the lessons of the conference. In his opinion the relations with Russia must be redefined, especially in the area of energy supply, and the economy policy badly needs not simply reforms but innovations. In his view at present Europe may appear to progress at multiple speed, but the period of convergence will come – he finally stated.