EU Needs Common Fiscal Capacity for Stability, Says Bank of Italy President

RIMINI, Italy – Fabio Panetta, the president of the Bank of Italy, emphasized the necessity of establishing a “common fiscal capacity” within the European Union to ensure long-term peace and prosperity. Speaking at the annual Meeting for Friendship Among People in Rimini, Panetta highlighted the theme of this year’s summit, “If we do not seek the essential, what are we seeking?” He warned that nationalistic tendencies could hinder the EU's integration process, stressing the need for collective action in the face of ongoing challenges. Panetta pointed out that the EU's response to the pandemic has not only been inadequate but has also contributed to a slowdown in integration efforts. He argued that the current governance structure, which combines a single monetary policy with fragmented national budgetary policies, is fundamentally unbalanced. “The idea that the Economic and Monetary Union (EMU) can function effectively without a centralized fiscal capacity is simply an illusion,” he stated, calling for significant reforms and investments in the coming years. In his address, Panetta identified key areas for EU focus, including the dual transition towards environmental sustainability and digital innovation, as well as strategic sectors like food, energy, health, and defense. He advocated for a coordinated European approach to these “supranational public goods” and urged the enlargement of the single market to include currently excluded sectors such as telecommunications and energy. Additionally, Panetta called on Italy to effectively implement the Next Generation EU plan, reduce public debt, and pursue structural reforms aimed at enhancing productivity. His remarks underscore the urgent need for a unified fiscal strategy to navigate the complexities of modern European governance.