Panel Session on Economics of Innovation: Opening remarks | Conference "Trust and Innovation – The Future of Finance"

It’s a pleasure to participate in this conference. 

Innovation is undoubtedly a crucial issue for Europe at this juncture. As the Draghi report has laid bare, Europe is struggling to generate and scale productivity-boosting innovation. This is an important factor behind its weak productivity and growth performance. The report talks about a “…static industrial structure which produces a vicious circle of low investment and low innovation”. I therefore highly welcome our discussion on how Europe can accelerate innovation to foster growth. 

Why do I consider this to be an important topic as a central banker? First, productivity-boosting innovation affects economic growth and inflation. Second, some of the barriers to innovation lie in areas where central banks have substantial expertise. And third, through our actions, we central bankers can help strengthen trust in the financial system and in the broader economic environment.

What levers do we have to stimulate innovation and drive growth in Europe? I will name three. 

Before I do so, let me clearly state: I do not believe that the main obstacles are a shortage of talent or a lack of innovative ideas. Europe has many strengths it can build upon: talent, innovative ideas, a high degree of political stability and a strong, reliable legal framework, providing the predictability and security needed for long-term investment, innovation, and economic growth. But Europe is struggling to help innovative firms scale up and grow into globally competitive companies. How then can scaling-up become simpler in Europe?

My first lever is Europe’s Single Market. Regulatory and administrative barriers should be identified and lowered where necessary.