Europe's Successes and the Path Forward - Isabel Schnabel Speech at Peterson Institute
Summary
ECB Executive Board Member Isabel Schnabel delivered a speech at the Peterson Institute in Washington, D.C. outlining Europe's economic achievements since the global financial and sovereign debt crises. The speech highlighted that inflation has returned to target without recession or financial instability, financial markets have become more integrated, and euro area banks maintain solid capital ratios and improved profitability. Schnabel also addressed future challenges including reviving growth, reducing trade barriers, increasing AI adoption and R&D spending, and strengthening sovereignty through reduced dependencies.
What changed
This document is a speech by ECB Executive Board Member Isabel Schnabel, not a regulatory instrument. The speech reviews Europe's economic successes since the global financial and sovereign debt crises, presenting data on inflation convergence to target, financial market integration, and improved banking sector resilience. Schnabel also discusses future policy challenges including reviving growth, reducing trade barriers, increasing AI adoption and defense R&D spending, and strengthening EU sovereignty through reduced energy and raw material dependencies.
For compliance officers and legal professionals, this speech provides insight into the ECB's assessment of eurozone economic conditions and the policy priorities the institution may pursue. While the speech does not create binding obligations, it signals areas of focus including financial integration, innovation through AI adoption, and strategic autonomy in energy and critical raw materials. Entities operating in the eurozone should monitor ECB communications for potential policy shifts informed by these assessments.
Archived snapshot
Apr 16, 2026GovPing captured this document from the original source. If the source has since changed or been removed, this is the text as it existed at that time.
ECB-CONFIDENTIAL
Europe's successes and the path forward
Isabel Schnabel Member of the Executive Board of the ECB
"The future economic architecture of the eurozone", Peterson Institute, Washington, D.C., 16 April 2026
www.ecb.europa.eu © Major progress in the euro area since the global financial and sovereign debt crisesRubric
Macro stability Convergence
Financial stability
Macro stability: Inflation brought back to target without recession or financial instability©Rubric
Real GDP growth and unemployment rate HICP inflation in the euro area in the euro area
(annual percentage changes) (quarter-on-quarter percentage changes; percent) GDP growth (lhs) Unemployment rate (rhs) 4 1012% 11.5 310% 2 98% 1 6% 0 8 4% -1 2% -2 7 0% -3 -2% -11.1 -4 62017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: Eurostat. Sources: European Commission and Eurostat.Latest observation: March 2026 (flash estimate). .
Convergence: Financial markets in the euro area have become more integrated©Rubric
Price- and quantity-based indicators 10-year sovereign spreads over Germany of financial integration in the euro area (basis points)
(index) France Italy Spain Greece PortugalPrice-based Indicator
Quantity-based indicator 3500Priced based indicator long-term average Sovereign Global COVID-19 Quantity-based indicator long-term average debt financial pandemic 270 3000 crisis1.0 crisis Global Sovereign COVID-19 Introduction financial 0 debt pandemic of the euro 2500 crisis crisis 220 00.8 2000 0 170 00.6 1500
10000 1200.4
0 500
0 700.2
00.0 20 -500
1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2025 2022 2024 2026 2005 2009 2013 2017 2021 2025 -1
Source: Bloomberg.Source: ECB staff calculations. Notes: Yields and hence spreads for Greece are available from March 2007. Notes: The price-based composite indicator aggregates ten indicators for money, bond, equity and retail Latest observation: 9 April 2026. banking markets; the quantity-based composite indicator aggregates five indicators for the same market segments except retail banking. The indicators are bounded between zero (full fragmentation) and one (full integration). Increases in the indicators signal greater financial integration.
Financial stability: Banks have solid capital ratios and are more profitable©Rubric
Capital ratios of banks Euro area banks' return on equity (RoE)
(percent) (percent)
Interquartile range Interquartile range 1621 Sovereign Global COVID-19 14 debt crisisfinancial 19 pandemiccrisis 1217RoE (weighted average)Tier1 ratio (median) 1015 813 COVID-19 611 pandemic 49 27 05 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q12007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sources: Bloomberg L.P. and ECB calculations. Sources: ECB supervisory data and ECB calculations.Notes: Tier 1 capital ratio as a percentage of risk-weighted assets, based on an unbalanced Notes: The sample are all SSM significant institutions. sample of up to 76 euro area banks.
Reviving growth is the euro area's key challenge©Rubric
Integration Innovation
Sovereignty
Integration: Reducing internal and external trade barriers carries great potential©Rubric
Intra-EU and extra-EU trade EU free trade agreements and their potential
(percentage of nominal GDP; (percent)left panel: goods market; right panel: services market) Share of EA trade in 2025 Share of world trade in 2030EU-27 Extra-EU 3055 17 25 1650 1545 20 1440 15 1335 10 1230 5 1125 0 FTA in place FTA being FTA being US 1020 2013 2018 2023
Sources: European Commission , IMF WEO and Trade Data Monitor. Source: EurostatNotes: Trade includes exports and imports of goods. "FTA in place" includes Albania, Andorra, Latest observation: 2025 for goods, 2024 for services.Bosnia and Herzegovina, Canada, Switzerland, Chile, Colombia, Costa Rica, Ecuador, United Kingdom, Georgia, Guatemala, Honduras, Iceland, Japan, South Korea, Moldova, Mexico, North Macedonia, Montenegro, Nicaragua, Norway, New Zealand, Panama, Peru, Singapore, El Salvador, Serbia, Turkey, Ukraine, Vietnam and Kosovo. "FTA being adopted" includes Australia, MERCOSUR, India and Indonesia. "FTA being negotiated" includes Malaysia, adoptednegotiatedPhilippines, Thailand and the UAE.2013 2017 2021 2025 •Innovation: AI adoption and R&D spending in defense can raise productivity growth ©Rubric
Cumulative public R&D Historical composition of Range of estimated TFP impact of AI multipliersdefence spending (2015-2023) under different scenarios
(y-axis: EUR of GDP increase per EUR of (% of total military spending)(% increase over 10 years)public R&D invested; x-axis: years) 5.0%Procurement Research and development4.5%3.0Operations and maintenance Military personnel4.0%Other2.5 3.5%2.0 3.0%1.5Euro area2.5%1.0 2.0%0.5 1.5%0.0 1.0% -0.5US 0.5% -1.0 0.0% -1.5Historical adoption speedAdoption speed as other GPT Observed speed of adoption0% 20% 40% 60% 80% 100% 1 2 3 4 5 6 7 8 9 10
Source: ECB calculations on CES data. Notes: The blue bars indicate the range of estimates across scenarios reflecting different Sources: JANES and ECB staff calculations. Source: Eurosystem estimates.assumptions about the share of the economy exposed to AI, which may remain constant Notes: The euro area figure is based on 18 countries, with over time (at either a low or high level) or increase as AI capabilities improve. no data available for Cyprus and Malta.
Sovereignty: Strengthening autonomy requires reduction of dependencies©Rubric
Share of energy consumption from Critical raw materials renewables in EUsubject to export restrictions (percent)(% of exports)
2022 2017 40%
70 35% 30%60 25%
40 15% 10%
30 World a verage 2022 5%
20 0% World a verage 2017 2005 2008 2011 2014 2017 2020 2023 2026 2029
10 0 Source: European Environment Agency.
Notes: The dotted line presents a linear trajectory to the minimum EU target for renewable TinZincLea dsources of 42.5% by 2030.S i lv e rNick elBoronSiliconCob a ltBa r y teIndiumIridiumCop perA rs en i cLithiumSource: EBRD Transition Report 2023-24.GalliumOsm iumF e ld spa rNiobiumHafniumLatest observation: 2024.Graphit eTitaniumPlatinumRhodiumTungst enSeleniumFluorsparBerylliumTantalumTelluriumAntim onyPalladiumZirconiumS tr on tiumV an ad iu mChrom iumAlu miniumRutheniumRare earthsM a ng an es eMagnesiumPho sphorusGermaniumMolybdenum
Innovation & sovereignty: ECB has embarked on a technological leap in payments©Rubric
Wholesale Retail Cross-border finance: payments: payments: Tokenised central Digital euro TIPS interlinking bank money across borders settlement
Thank you very much for your attention!
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