Lecture Series "Responsibility for the Future"

Quo vadis Eurozone?

The Motivations of a Future Member of the Euro Zone and the ECB’s Point of View

Foundation lecture by Dr. Valdis Dombrovskis and Jörg Asmussen

Five years after the collapse of Lehman Brothers and the beginning of the financial crisis, this issue remains important. In addition to the EU’s and Eurogroup’s bailout funds, the actions of the European Central Bank were primarily responsible for averting the acute dangers facing the single currency. These actions have not resulted in overcoming the crisis in the heavily indebted nations of southern Europe, however.

This makes it even more puzzling that in January 2014, the Republic of Latvia is going to join the euro zone as its 18th member.

How did Latvia overcome the deep recession at the beginning of the financial crisis? And is the Latvian model an example for the other crisis-stricken countries in Europe?

On Wednesday (October 30, 2013), Latvian Prime Minister Dr. Valdis Dombrovskis spoke about these questions in the Alte Reithalle in Stuttgart. Within the scope of this foundation lecture, Dr. Dombrovskis discussed the issue with Jörg Asmussen, member of the Executive Board of the European Central Bank. The talk was moderated by Rolf Benders, who reports on the ECB as a journalist for the Handelsblatt business newspaper.

Dr. Dombrovskis, who took over as prime minister in March 2009 at the height of the financial crisis, reported that his government immediately enacted drastic reforms. Among other measures, the salaries of public servants were cut by an average of 25 percent. Thanks to these reforms, the country quickly regained its financial stability. Investor and consumer confidence rebounded. This was the basis for new growth in Latvia.

Dr. Dombrovskis warned about the risks of delaying necessary reforms. Due to its weak economy, Greece only implemented its austerity measures in a gradual process. This does not bring about financial stability, however, and as a result, Greece is still suffering from a recession.

Jörg Asmussen welcomed Latvia’s decision to join the euro zone. He emphasized that the measures the country used to pull itself out of the financial crisis cannot simply be applied to other countries. But Latvia is an example of how an economic recovery could be possible within the currency union.

Picture Gallery

Photos: Horst Rudel
Prof. Dr. Joachim Rogall, Chief Executive Officer of the Robert Bosch Stiftung
From left: Franz Fehrenbach, Chairman of the Supervisory Board, Robert Bosch GmbH, Jörg Amussen, Member of the Executive Board of the European Central Bank, Prof. Dr.-Ing. Hermann Scholl, Honorary Chairman of the Bosch Group, Dr. Valdis Dombrovskis, Prime Minister of the Republic of Latvia, Dr. Kurt W. Liedtke, Chairman of the Board of Trustees of the Foundation.
Dr. Valdis Dombrovskis, Prime Minister of the Republic of Latvia.
Dr. Valdis Dombrovskis, Rolf Benders, who reports on the ECB as a journalist for the Handelsblatt business newspaper, and Jörg Asmussen.
Jörg Asmussen, Member of the Executive Board of the European Central Bank.
Dr. Valdis Dombrovskis, Rolf Benders, and Jörg Asmussen.
Asmussen, Fehrenbach, and Liedtke.

Audio

Jörg Asmussen, Member of the Executive Board of the European Central Bank:
Dr. Valdis Dombrovskis, Prime Minister of the Republic of Latvia: