A European safe asset: From crisis pragmatism to strategic necessity

Welcome address by Olli Rehn, First Vice-Chair of the ESRB and Governor of the Suomen Pankki, at the joint workshop of the European Systemic Risk Board Advisory Technical Committee and Advisory Scientific Committee on “A European Safe Asset and Financial Stability”

It is my great pleasure and honour to welcome you to this ESRB Joint Workshop on ‘A European safe asset and financial stability’. Let me first thank the organisers and warmly welcome our distinguished speakers and panellists – and all of you joining us, both in-person and online.

I am particularly pleased to see such a strong group of policymakers, academics, and market practitioners gathered here. When it comes to safe assets, both the design specifics and market plumbing are essential in determining whether good ideas become practical successes.

This workshop takes place at a moment when geopolitics and economic policies are tightly interconnected. The world has become more power-based than rules-based, and events from Russia’s illegal war in Ukraine to the Iran war are reshaping the entire world order. Uncertainty and unpredictability are defining features of these times, spilling over into financial markets through liquidity, collateral and risk-off dynamics.

In this context, the debate on a European safe asset is no longer a niche – in my view, it is particularly timely and relevant. The need for strong anchors and havens is greater than ever and potentially rising.

First, it has become clear that we need truly substantial investments in European public goods, especially in common defence and the green transition. If done well, they can boost productivity and innovation. But they require financing that is stable, efficient and scalable.

Common European instruments can be part of the solution and help catalyse private investment, in line with the Savings and Investments Union. This combination is particularly important as many EU Member States are highly indebted, with little fiscal space.