Speech by Alfred Kammer, Director, IMF European Department, at the House of the Euro, Brussels
Thank you, [Mr. Kisselevsky], for the kind welcome and the ECB for hosting us again here in Brussels at the House of the Euro.
The year 2025 marked a period of profound transformation in the global economy, driven by a reconfiguration of trade policies. For Europe, these developments follow a series of crises—from the pandemic, to Russia’s invasions of Ukraine—that have tested the region’s resilience. Timely policy action has helped avoid the worst, and Europe continues to grow—but it is now becoming evident that Europe faces very low growth over the medium term.
My message today is that this has major implications for the fiscal challenges Europe is facing. In short, unless Europe steps up in a major way to lift growth to another level, traditional fiscal consolidation measures will not be enough to prevent debt levels from becoming explosive, putting Europe’s social model at risk. But let me begin by setting the stage and discuss our baseline outlook.
In our just released October forecast we have slightly upgraded our forecast for 2025 for the euro area to 1.2 percent. But the improvement is short-lived, and we see several factors dampening the recovery in 2026. The large front-loading of exports to the U.S. earlier this year is reversing and uncertainty remains. The effects of tariffs on exports will increasingly be felt as profits are squeezed. The preliminary flash estimate for Q3 released last Thursday is broadly in line with this forecast.
Our medium-term forecast expects mediocre growth, due to persistent challenges that will continue to constrain Europe’s economic dynamism. Today, the EU’s GDP per capita is nearly 30 percent lower than that of the U.S., and without meaningful reform, this gap could become even larger.
Let me highlight three key areas:
• Structural Barriers: Intra-EU trade barriers remain high—equivalent to 44 percent for goods and 110 percent for services. Regulatory frictions slow cross-border mobility of capital and labor. And the lack of a unified energy market keeps costs up and weakens energy security and resilience.
• Demographic Headwinds: Europe’s population is aging. By 2050, over two-thirds of EU countries will see a decline in their working-age population. This gives urgency to the reform agenda around labor markets and skills.
• Investment Gaps: In some countries, especially in the CESEE region, large investment gaps are depressing labor productivity and growth, pointing to the importance of both EU-level and domestic reforms to deepen capital markets and incentivize private investment.
European policymakers recognize the urgency to act. But progress has been slow, at best. This needs to change. This brings us to the question, “how Europe is going to pay for the things it cannot afford?” We are all familiar with the difficult fiscal landscape in the region, with high debt in many countries, and pressures on public spending levels. But the actual fiscal situation is worse. Europe’s fiscal challenge will become even more pressing, for several reasons.
First, new demands on public spending have emerged, in defense, and for energy security. This adds to spending pressures accumulating in pension and health care systems. Overall, we estimate additional spending in these four areas of 4½ percent of GDP in Advanced Europe including the UK but excluding CESEE economies (AE excl CESEE) by 2040, and 5½ percent of GDP in CESEE countries.
Second, rising bond yields are combining with high debt levels to create a rising interest bill in many countries.
Third, the mediocre outlook for medium-term growth and labor supply weighs on revenue collection and puts upward pressure on debt levels.
What is abundantly clear is that doing nothing is not an option! Our simulations show that, under current policies, public debt would be on a steeply-increasing path over the next 15 years. The average debt ratio across European countries could reach 130 percent by 2040.
How big of a problem is this?
For the purposes of our simulations, we use a sustainable reference debt path that—over the longer term—does not exceed 90 percent of GDP. This benchmark reflects increased debt-carrying capacity in many countries over the past three decades. It suggests an enormous sustainability gap: if no action is taken, by 2040, average debt ratios could be 40 percentage points above sustainable levels. If the debt path was anchored around debt of 60 percent of GDP, as is still embedded in the European fiscal framework, the gap would reach an even more daunting 70 ppts of GDP. So, the question is, how to prevent debt from becoming rapidly unsustainable, while absorbing rising spending pressures?
A sustainability gap that large is hard to address by conventional fiscal consolidation alone. Without reforms, the amount of deficit cutting needed to bring debt in line with the reference path would be almost 1 percent of GDP per year for five years, or cumulatively almost 5 percent of GDP. This would go far beyond what past consolidation efforts in Europe have delivered. On average, successful consolidation campaigns have yielded cumulative savings of just about 3 percent of GDP and lasted only about 3-4 years. As any Minister of Finance will tell you, a sustained fiscal effort generating 3 percent of savings is an enormous political endeavor. 5 percent is an almost impossible feat and would require deep cuts into the European model and social contract.
The way out is to accelerate growth. In our analysis, we show that even a set of moderate reforms can make a difference. It includes:
• growth-enhancing domestic reforms closing one quarter of the gap to the best performers;
• taking first steps to deepen the single market and increase the EU budget for public goods like innovation and defense, funded through joint borrowing;
• pension reforms that help to stabilize spending;
• and measures to catalyze private investment through public investment banks.
This moderate set of reforms on its own would lower the cumulative fiscal adjustment needs from around 5 to slightly above 3.5 percent and bring the average debt path one third of the distance to the sustainable path. Not all countries are the same, and some have lower starting levels of debt or less fiscal pressures to deal with. But we calculate that around three-quarters of European countries will need to consolidate, after implementing the “moderate” set of reforms. The amount of required consolidation implied by our illustrative exercise is notably larger on average than what has been committed to in the Medium-Term Fiscal and Structural Plans under the EU fiscal framework. For instance, the average adjustment under submitted and signed off plans would fall about 2 percent of GDP short of our estimates.
But let me be clear that more reforms could change this picture. In forthcoming work, we show that an all-out reform effort can make a significant contribution to closing Europe’s GDP per capita gap with the U.S. This would obviously lower the need for fiscal consolidation compared with the scenario we have modeled here. For some countries with already-high debt levels, our simulations show that a combination of reform and conventional consolidation may not be enough to keep debt sustainable. We find that around one quarter of European countries would need fiscal consolidation of above one percent of GDP per year for five years, after implementing the “moderate” set of reforms. As mentioned, this is more than what has proved feasible in the past.
These countries will therefore face difficult choices about the scope and ambition of government given the available resources. In some cases, this may mean a discussion about the social contract underlying the “European model.” For example, if resources are truly limited, providing public services fully without cost might no longer be affordable. Instead, private financing could be increased while protecting the most vulnerable. This could be done by charging user fees for some services, like health care, while keeping the services free for those on low incomes. Large tax reforms can also be designed in a progressive way, which is  particularly relevant for CESEE countries, which have more scope for revenue mobilization. Privatization of SOEs is another option in these countries to create fiscal space, that doesn’t necessarily have to impact those on the lowest incomes.
The potential savings from these more fundamental changes are substantial. For instance, if all European countries were to reduce the share of public financing in health, education, pensions, infrastructure and energy security, to the OECD average, then this could generate savings of up to 3 percent of GDP on average. So what does this analysis tell us about how Europe can pay for these things that are hard to afford? Well there are some key takeaways.
One, there are no silver bullets. For most countries, the policy package will be a mix of reforms and consolidation.
Second, it’s time to stop muddling through and be more strategic. Tinkering at the margins will likely not be sufficient to keep debt sustainable, but can still generate political opposition. Instead, a carefully-selected set of significant reforms and sizable consolidation measures will be needed to bridge the gap.
Finally, the approach to the reform process will be critical to maximize its chances of its success. Its purpose will have to be well communicated, with dialogue between relevant stakeholders, to highlight the economic and social benefits of avoiding a more painful and disorderly correction forced by financial market pressure. Different parts of the policy package can be bundled together, to increase net benefits to key constituencies, with careful sequencing so that the burden of reform does not become overwhelming.
These steps will be the key to a durable policy package, that meets the fiscal challenge, and builds a more prosperous and stable economy for all.
 
Compliments of the International Monetary FundThe post IMF | How can Europe Pay for Things it Cannot Afford? first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.

By Ferdinand Dreher and Nils Hernborg, ECB

Many Bulgarians are still hesitant about giving up the Lev on 1 January. Mixed feelings are not uncommon in countries adopting the euro. However, survey data show that support significantly increases once people start using the euro in their daily lives.

When countries prepare to adopt the euro, public sentiment is often hesitant or split. People tend to worry about prices going up, as well as a loss of their country’s sovereignty or sense of national identity. They can also be sceptical as to whether the benefits will truly outweigh the costs. This is understandable: a currency is a powerful symbol of national identity, and major changes naturally create uncertainty.
Yet survey data reveal a striking and consistent trend: mixed sentiment prior to adoption shifts as support for the euro rises significantly after adoption. This pattern holds true across all eight countries that joined the euro area after 2002.[1]
Why does public opinion shift so markedly once people have the euro in their hands? This blog post draws on data from Eurobarometer surveys to shed light on this phenomenon. As Bulgaria prepares to join the euro area on 1 January 2026, this analysis helps us understand how public opinion could evolve after the changeover.
How public support changes before and after euro adoption
Eurobarometer data from the eight countries that joined the euro area after 2002 reveal a remarkably consistent pattern: public support for the euro tends to rise sharply after adoption.
In the final survey before accession, public opinion is often mixed. Support typically begins to increase slightly just before adoption, around the time when the country gets formal approval to join the euro area. However, the most significant shift occurs immediately after the changeover. On average, support for the euro jumps by 11 percentage points from the last survey before adoption to the first survey conducted afterward. Following adoption, public opinion stabilises at a clear majority in favour in all countries, with an average of 73 percent supporting the euro and only 22 percent against. That is a large net support of 51 percent.

Chart 1
Cumulative change in public support for the euro

(percentage point changes in public support before and after last pre-adoption survey)

Sources: European Commission Standard Eurobarometer, ECB calculations.
Notes: The European Commission’s biannual Standard Eurobarometer survey asks people a straightforward question – whether they are for or against “a European economic and monetary union with one single currency, the euro”. For each country, we looked at how the share of those “for” the euro changed before and after they adopted the euro, using the last pre-adoption survey as a reference point (indexed at 0). The Standard Eurobarometer first asks its respondents about their support for the euro in its spring 2000 survey, at which point 11 of 12 countries introducing the euro into circulation in 2002 had already officially introduced the currency in 1999. The cumulative change in support for the euro is calculated as an arithmetic average across eight accession countries and is plotted against the respective survey count relative to the accession date of that country. The cumulative change is indexed at zero in the last survey before accession. The exact time of the year in which Standard Eurobarometer surveys were conducted varies slightly from year to year, especially during the Covid-19 pandemic. Usually, the biannual surveys consist of a spring release (conducted around Mar-May, i.e. around 4 months after the turn of the year) and autumn release (conducted around Sep-Nov, around 2 months before the turn of the year). To harmonise the visualisation across countries, the x-axis in Chart 1 plots changes in relation to the survey count. The number of months in brackets in the chart is only indicative and may be higher/lower for specific countries. The latest observation is for Autumn 2024 (fifth survey after accession in Croatia). Since the question is first posed in Slovenia in the Autumn 2004 survey, the first change in support for the euro for Slovenia is from the fourth survey before accession. Confidence bands show the minimum and maximum values.

The increase can be observed across all eight accession countries, regardless of the initial level of support. For example, in Estonia and Slovenia, support rose by 8 percentage points, while in Latvia, it increased by 15 points. In Croatia – the latest country to join the euro area in 2023 – support for the euro increased by 11 percentage points between the last survey before introduction of the euro (July 2022) and the first survey after (February 2023). The positive shift can also be observed in all sociodemographic groups – young and old, men and women, different education levels and regardless of whether people live in towns or the countryside. And, importantly, as Chart 1 shows, support stays at the higher levels in the years after adoption.
Main concerns before euro adoption
Why are people sceptical of giving up their currency prior to adoption? Survey data reveal different underlying factors.
The most immediate and widespread concern is that prices will rise when the old currency is replaced by the euro. On average, about three out of four citizens fear that the changeover will lead to higher prices (Chart 2). This anxiety is often fuelled by uncertainty about how shops will convert prices and whether the transition will be used as an excuse for “rounding up” prices.[2]
Another concern is losing a symbol of national identity. Banknotes and coins carry history, images and collective memory. Replacing a national currency can feel like giving up a small part of people’s common identity, especially for older generations for whom the currency is entwined with pivotal moments in life. While this concern is less pronounced than fears about prices, about half of participants in pre-adoption surveys express worry about losing a symbol of their national identity (Chart 2).
A third worry is the perceived loss of national control over economic policy. The idea that interest rates and other key decisions will be set outside one’s own national borders can be unsettling. And so, on average, around four in ten citizens surveyed before adoption believe that switching to the euro will mean losing control over their country’s economic policy.
Beyond these specific concerns, people may also worry about the practical challenges of switching currencies. The benefits of euro adoption – such as easier travel, lower foreign exchange costs and smoother trade – can seem distant or abstract before the changeover. In contrast, the hassles of dual pricing, new notes and coins, and converting wages and pensions feel immediate and concrete. In an environment where information is incomplete or partisan, loss aversion can dominate the narrative and lead people to be more sceptical about euro adoption.

Chart 2
Concerns prior to euro adoption

(percentages)

Sources: European Commission Flash Eurobarometer.
Notes: The data include the results from the Flash Eurobarometer (“Introduction of the euro in the Member States that have not yet adopted the common currency”) in the latest available survey prior to adoption for each country as follows: Slovenia (March-April 2006), Cyprus (September 2007), Malta (September 2007), Slovakia (May 2008), Estonia (September 2010), Latvia (April 2013), Lithuania (April 2014) and Croatia (April 2022). The questions covered and answers in brackets include “What impact, if any, do you think the introduction of the euro will have on prices in (THIS COUNTRY)? – [Will increase prices]”, “Could you tell me for each of the following statements if you agree or disagree…? Adopting the euro will mean that (OUR COUNTRY) will lose control over its economic policy (%) – [Totally agree + Tend to agree]” and “Could you tell me for each of the following statements if you agree or disagree…? Adopting the euro will mean that (OUR COUNTRY) will lose a part of its identity (%) – [Totally agree + Tend to agree]”.

Why does support increase after adoption?
The first and most important factor driving the rise in public support after euro adoption could be that many of the initial fears simply do not materialise. EU institutions and national authorities carefully plan the transition. They provide clear information, dual price displays and consumer hotlines. Also, they facilitate voluntary “fair pricing” charters with retailers. As cash machines dispense euros, salaries arrive on time, and shops are open about how they set prices, trust in the new currency grows. Once the euro becomes the new status quo, people tend to warm to it through daily exposure – a psychological phenomenon called “mere exposure effect”. Fears of price spikes may also fade as consumers typically observe that the changeover has limited effects on inflation.[3]
At the same time, the benefits of adopting the euro become tangible and show up in survey data (Chart 3). Travellers experience the ease of paying in the same currency across much of the continent. Online shoppers compare and pay across borders without worrying about exchange fees. Firms experience fewer foreign-exchange risks. Banks begin to offer products on better terms. And investors treat the country as part of a larger currency area, which can boost trade and investment.[4] There is good reason to believe that these practical advantages reinforce positive attitudes towards the euro among the new currency users.
Meanwhile, survey data also indicate that identity adapts. The euro does not erase national identity. It adds a European layer on top of it (Chart 3, panel a). National symbols are minted on domestic euro coins, while cultural life and language remain unchanged. Over time, being part of the euro area can itself become a source of pride and a symbol of European integration and stability. Being a member of a club that issues a currency of global standing – and as a result wields political and economic influence – adds to the economic benefits and can outweigh concerns about ceding monetary autonomy.
Ultimately, public support (shown along the horizontal axes in Chart 3) remains high and rises further as the euro continues to deliver repeated, practical benefits that make life easier. Data also show that directly after adoption a large proportion of citizens already feel the benefits of the euro mentioned above (vertical axes of Chart 3, panels b and c). And, importantly, this sentiment increases over time in tandem with support for the euro.

Chart 3
Support for the euro and its perceived benefits after adoption

(x-axis: share of respondents expressing support for the euro; y-axis: share of respondents perceiving the respective benefit of the euro)

a) Does the euro make you personally feel more European than before?

b) Has the euro made travelling easier and less costly?

c) Has the euro made it easier to compare prices?

(percentages)

(percentages)

(percentages)

Sources: Standard Eurobarometer and Flash Eurobarometer.
Notes: The x-axis in each panel shows the share of respondents expressing support for the euro, as measured in the Standard Eurobarometer in the first survey after adoption for each country and in the latest survey (2025). The y-axis in each panel shows the share of respondents that perceive the respective benefit of the euro, as measured in the Flash Eurobarometer (“The euro area”) in the first survey after adoption for each country and in the latest survey (2024). For the question on the euro making people feel more European than before, the latest data point available is 2023. The dots represent each one of the eight countries that adopted the euro after 2002. The questions covered and answers in brackets include “Does the euro make you personally feel more European than before, or would you say that your feeling of being European has not changed? (%) – [Yes, more European]”, “Do you think that the euro has made travelling easier and less costly? (%) – [Yes]” and “Do you think that the euro has made it easier to compare prices and shop in different EU countries, including online? (%) – [Yes]”.

Looking ahead: lessons from euro adoption
The experience of the countries that have adopted the euro since 2002 offers a clear lesson: initial scepticism and concern often give way to broad public support once the currency is in use.
The euro area will always contain different histories, cultures and preferences. What keeps it together through recessions, pandemics and energy shocks is a shared sense that the common currency provides concrete benefits and therefore enjoys broad public support. In this sense, the euro is more than just a currency. It is a powerful symbol of unity, stability and shared prosperity. Countries that have adopted the euro since 2002 have seen fears give way to tangible benefits, from smoother trade and travel to a stronger sense of belonging in Europe.
As Bulgaria prepares to join the euro area in 2026, the experiences from past changeovers provide valuable insights on how to build strong foundations for public support for the euro after adoption. Transparent communication, careful planning, and measures to reassure the public are essential to ensuring a smooth transition and together lay the groundwork for long-term success.
The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem.
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The euro was officially introduced in 1999 and entered into circulation in 12 countries in 2002. This analysis looks at the countries that joined after 2002, namely, Slovenia (2007), Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014), Lithuania (2015) and, most recently, Croatia (2023).
On average across the eight countries, 74% of respondents were concerned about abusive price setting during the changeover in the last survey prior to adoption, according to the Flash Eurobarometer.
See Falagiarda, M., Gartner, C., Mužić, I. and Pufnik, A. (2023), “Has the euro changeover really caused extra inflation in Croatia?”, The ECB Blog, 7 March.
See Falagiarda, M. and Gartner, C. (2022), “Croatia adopts the euro”, Economic Bulletin, Issue 8, ECB and Gunnela, V., Lebastard, L., Lopez-Garcia, P., Serafini, R. and Mattioli, A. (2021), “The impact of the euro on trade: two decades into monetary union”, ECB Occasional Paper No 283.

 
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Today, the European Commission adopted its annual Enlargement Package, presenting a comprehensive assessment of the progress made by the enlargement partners over the past twelve months. This year’s package reaffirms that the momentum for enlargement stands high on the priority agenda of the EU. It also confirms that the accession of new Member States is increasingly within reach.
Staying consistent and following a merit-based approach is key to successful EU accession. Montenegro, Albania, Ukraine, the Republic of Moldova, Serbia, North Macedonia, Bosnia and Herzegovina, Kosovo, Türkiye and Georgia continue their respective paths towards the EU. The pace of their reforms, in particular in the areas of democracy, the rule of law and fundamental rights, directly impacts the speed of accession. These advancements benefit both aspiring Member States and current EU Member States, fostering prosperity, democracy, security and stability while unlocking new opportunities for citizens and businesses, such as strategic investments and opening of the Single Market.
Ursula von der Leyen, President of the European Commission said: “We are more committed than ever to turning EU enlargement into a reality. Because a larger Union means a stronger and more influential Europe on the global stage. But enlargement is a merit-based process. Our package provides specific recommendations to all our partners. And to all of them we say: EU accession is a unique offer. A promise of peace, prosperity and solidarity. With the right reforms and a strong political will, our partners can seize this opportunity.”
The assessments, accompanied by recommendations and guidance on the reform priorities, provide a roadmap for enlargement partners toward EU membership. The Commission remains fully committed to supporting future Member States in this journey. Gradual integration of the aspiring Members into the Single Market strengthens ties with the Union already before their accession. Significant progress has been achieved over the past year. With enlargement as a clear policy goal in this mandate, the Commission is committed to ensuring both the readiness of aspiring members as well as the EU’s preparedness to welcome them. To this end, a Communication on in-depth policy reviews and reforms will be presented soon.
To ensure that new Member States continue to safeguard and maintain their track-record on the rule of law, democracy and fundamental rights, future Accession Treaties should contain stronger safeguards against backsliding on commitments made during the accession negotiations.
Effective communication, as well as countering foreign information manipulation and interference, including disinformation is a strategic imperative.
The Commission also stands ready to support Member States’ effort to further anchor public trust in the process and help enlargement move forward with the legitimacy it needs.
Main conclusions
Montenegro has marked significant progress toward EU accession, closing four negotiation chapters over the last year. Montenegro’s commitment to provisionally closing further chapters by the end of 2025 reflects its dedication to European integration. Maintaining steady progress on reforms and seeking continuous broad political consensus are crucial for achieving the country’s target to close accession negotiations by the end of 2026. Subject to maintaining the pace of reforms, Montenegro is on track to meet this ambitious objective.
Albania has made significant progress, with four clusters opened over the last year. Preparations for the opening of the last cluster this year are well advanced. Progress has been achieved on the fundamentals, particularly on justice reform and in the fight against organised crime and corruption. Continued efforts are now needed to meet the interim benchmarks under the fundamentals, which will pave the way to start closing negotiating chapters once the necessary sector reforms have been made. Achieving Albania’s goal of concluding negotiations by 2027 depends on maintaining reform momentum and fostering inclusive political dialogue. Subject to maintaining the pace of reforms, Albania is on track to meet this ambitious objective.
Despite Russia’s unrelenting war of aggression, Ukraine remains strongly committed to its EU accession path, having successfully completed the screening process and advanced on key reforms. Ukraine has adopted roadmaps on the rule of law, public administration, and the functioning of democratic institutions, as well as an action plan on national minorities, which the Commission assessed positively. Ukraine has met the conditions required to open clusters: one (fundamentals), six (external relations), and two (internal market). The Commission expects Ukraine to meet the conditions to open the remaining three clusters and works to ensure that the Council is in a position to take forward the opening of all clusters before the end of the year. The Ukrainian government has signalled its objective to provisionally close accession negotiations by the end of 2028. The Commission is committed to support this ambitious objective but considers that, to meet it an acceleration of the pace of reforms is required, notably with regards to the fundamentals, in particular rule of law.
In the face of continuous hybrid threats and attempts to destabilise the country, Moldova has significantly advanced on its accession path, successfully completing the screening process. The first EU-Moldova summit in July 2025 marked a new stage of cooperation and integration. Moldova has adopted roadmaps on the rule of law, public administration, and the functioning of democratic institutions, which the Commission assessed positively. The Commission’s assessment is that Moldova has met the conditions required to open clusters: one (fundamentals), six (external relations), and two (internal market). The Commission expects Moldova to also meet the conditions to open the remaining three clusters and works to ensure that the Council is in a position to take forward the opening of all clusters before the end of the year. The government of Moldova has signalled its objective to provisionally close accession negotiations by early 2028. The Commission is committed to supporting this objective, which is ambitious but achievable, provided Moldova accelerates the current pace of reforms. Sustaining reform momentum is crucial, reinforced by strong parliamentary support for the country’s European path following elections in September.
The polarisation in Serbian society has deepened against the background of mass protests taking place across Serbia since November 2024, reflecting disappointment of citizens over inter alia corruption and the perceived lack of accountability and transparency coupled with instances of excessive use of force against protestors and pressure on civil society. This has led to an increasingly difficult environment where divisive rhetoric has led to a serious erosion of trust amongst the stakeholders which, in turn, impacts the accession process. Reforms have significantly slowed down. While acknowledging some recent developments, such as the relaunch of the procedure of selection of the new Council of the regulatory body for electronic media (REM) and progress in the legislative process on the Law on a unified voter register, which now need to be completed and implemented, as well as a recent increase in alignment with the EU’s common foreign and security policy, which needs to be pursued, more needs to be done. Serbia is expected to overcome the standstill in the area of judiciary and fundamental rights overall and urgently reverse the backsliding on freedom of expression and the erosion of academic freedom. The Commission assessment from 2021 that Serbia had fulfilled the opening benchmarks for cluster 3 (competitiveness and inclusive growth) remains valid.
North Macedonia continued its work on the roadmaps for the rule of law, public administration reform, and the functioning of democratic institutions, as well as on the action plan on the protection of minorities. Further swift and decisive action is needed on the opening benchmarks, in line with the negotiating framework, with a view to opening the first cluster as soon as possible and when relevant conditions are met. North Macedonia should intensify efforts to uphold the rule of law, by safeguarding judicial independence and integrity, and strengthening the fight against corruption. The Country also needs to adopt the necessary constitutional changes with a view to including in the Constitution citizens who live within the borders of the state and who are part of other people, such as Bulgarians, as outlined in the Council Conclusions of July 2022, which the country committed to launch and achieve.
In Bosnia and Herzegovina, the political crisis in the Republika Srpska entity and the end of the ruling coalition have undermined EU accession progress, resulting in limited reforms, namely on data protection and border control, as well as the signature of the Frontex status agreement. On a positive note, Bosnia and Herzegovina submitted in September 2025 its Reform Agenda to the European Commission. Following recent institutional changes in the Republika Srpska entity, Bosnia and Herzegovina has the opportunity to deliver on reforms on the EU path. To effectively start accession negotiations, authorities must in the first place finalise and adopt judicial reform laws, in full alignment with European standards, and appoint a chief negotiator.
Kosovo has remained committed to its European path, with a high level of public support. The delay in forming the institutions following the February general elections slowed down EU-related reform progress. Forging cross-party cooperation and re-prioritising these reforms is necessary for Kosovo to get back on track of its EU path. Normalisation of relations with Serbia and implementation of Dialogue commitments remain an integral part of Kosovo’s European perspective. The Commission stands ready to prepare an Opinion on Kosovo’s membership application, if requested by the Council. The Commission has taken the first steps to gradually lift measures against Kosovo in place from May 2025. The next steps remain conditional on sustained de-escalation in the north. The Commission intends to further lift these measures provided an orderly transfer of local governance in the north is achieved following the second round of the local elections and de-escalation is sustained.
Türkiye remains a candidate country and key partner for the EU. In line with the European Council conclusions of April 2024, the EU has advanced relations with Türkiye in a phased, proportionate and reversible manner, engaging on shared priorities. The resumption of Cyprus settlement talks is a key element of cooperation. At the same time, the increasing legal actions against opposition figures and parties, alongside multiple other arrests, raise serious concerns about Türkiye’s adherence to democratic values. While dialogue on the rule of law remains central to EU-Türkiye relations, the deterioration of democratic standards, judicial independence, and fundamental rights has yet to be addressed. Accession negotiations with Türkiye remain at a standstill since 2018.
In 2024, the European Council concluded that Georgia‘s EU accession process was de facto halted. Since then, the situation has sharply deteriorated, with serious democratic backsliding marked by a rapid erosion of the rule of law and severe restrictions on fundamental rights. This includes legislation severely limiting civic space, undermining freedom of expression and assembly, and violating the principle of non-discrimination. Georgian authorities need to urgently reverse their democratic backsliding and undertake comprehensive and tangible efforts to address outstanding concerns and key reforms supported by cross-party cooperation and civic engagement, in line with EU values. Following the December 2024 European Council Conclusions and in light of Georgia’s continued backsliding, the Commission considers Georgia a candidate country in name only. The Georgian authorities must demonstrate resolute commitment to reverse course and return to the EU accession path.
Next steps
It is now for the Council to consider today’s recommendations of the Commission and take decisions on the steps ahead in the enlargement process.
Background
Enlargement is a strict, fair and merit-based process, based on the objective progress of each enlargement country. The EU supports the strengthening of institutions, democratic governance and public administration reforms across these countries.
By fostering gradual integration, the EU brings benefits even before the accession. Initiatives such as the €6 billion Growth Plan for the Western Balkans, the €1.9 billion Moldova Growth Plan, and the €50 billion Ukraine Facility allow countries advance in their reforms, as well establish stronger connection with the EU, such as through gradual integration and the participation in SEPA and “Roam Like at Home”.
Each enlargement has made our Union stronger. When ten countries joined the EU in 2004, it marked the Union’s largest ever expansion. In the two decades since, newcomers have seen living standards double, unemployment fall by nearly half, life expectancy rise from 75 to 79 years, poverty and social exclusion drop sharply, and 6 million new jobs created. For the existing members, trade has multiplied more than fivefold ever since, while 20 million jobs have also been created. For the EU as a whole, the Single Market gained 74 million new consumers at the time and the EU economy has expanded by 27% despite global crises.
For more information
2025 Communication on EU Enlargement Policy – Enlargement and Eastern Neighbourhood
Factsheet on the EU accession process
Factsheet on the accession negotiations state of play
For detailed findings and recommendations, see:
Montenegro: Report; Factsheet
Albania: Report; Factsheet
Ukraine: Report; Factsheet
Moldova: Report; Factsheet
Serbia: Report; Factsheet
North Macedonia: Report; Factsheet
Bosnia and Herzegovina: Report; Factsheet
Kosovo: Report; Factsheet
Türkiye: Report; Factsheet
Georgia: Report; Factsheet
 
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Speech by Christine Lagarde, President of the ECB, at the high-level conference on “Bulgaria on the Doorstep of the Eurozone”, jointly organised by the Bulgarian Ministry of Finance and Българска народна банка (Bulgarian National Bank)

On 1 January 2026 Bulgaria will adopt the euro as its currency. The change will happen in a single night, but it is the outcome of a much longer journey. Bulgaria has long been part of Europe’s monetary story. From the lev’s peg to the French franc in the late 19th century to its anchor to the Deutsche Mark in the late 20th century, the country has always looked towards Europe whenever it has had the freedom to choose its destiny.
Now, with the adoption of the euro, Bulgaria is taking the final step towards – and its rightful place at the heart of – Europe’s monetary union. Yet every historic step brings questions, and sometimes fears. Paìsiy Hilendàrski – soon to grace Bulgaria’s €2 coin – once urged “Bulgarian, do not forget yourself; know your kin and language.”
Some naturally worry that adopting the euro might mean giving up a part of that hard-won independence. But Bulgaria’s motto – “United we stand strong” – is engraved not only on its coat of arms, but also in its very spirit. By joining the euro area, Bulgaria is not losing itself. It is reaffirming that it is proud, sovereign and European.
The benefits of the euro for Bulgaria
Adopting the euro brings two key benefits for Bulgaria: prosperity and security.
First, prosperity.
Bulgaria’s journey to the heart of Europe has already delivered remarkable gains. Over the past decade, GDP per capita has risen from one-third of the euro area average to almost two-thirds today. This success has been built on deep integration into the European economy – and even more so, into the euro area economy. Today, 65% of Bulgaria’s exports go to other EU countries, and 45% go to euro area countries. Under its currency board, Bulgaria has already enjoyed much of the exchange rate stability that euro area membership provides. But adopting the euro will take this integration one step further by removing the last currency barriers within the Single Market.
For Bulgarian firms, that means zero conversion costs when exporting to their primary European customers. Small and medium-sized enterprises will save around one billion levs every year in conversion costs alone.[1] Take Bulgaria’s automotive industry, which supplies around 80% of electronic components used in European vehicles.[2] Instead of spending time and money on currency conversion, these companies can reinvest in growth. Adopting the euro will also open the door wider to European capital markets. It will lower funding costs and provide a more stable basis for long-term investment.
These advantages are already visible in Bulgaria’s improved credit ratings and narrower sovereign spreads, which will translate into lower borrowing costs for everyone. With these foundations, Bulgarian firms can continue to invest, innovate and move up the value chain – as they have done so impressively already. The second benefit is security. We are living in a far more volatile world, marked by constant external shocks. For a small and open economy like Bulgaria, where nearly one in every two jobs depends on foreign demand, that exposure can be particularly acute.[3]
The currency board has long insulated Bulgaria by eliminating euro-lev fluctuations. While it is a strong shield, such protection cannot be assumed to be watertight. History shows that fixed exchange rate regimes are vulnerable under stress: the currency “snake” of the 1970s and, later, the European Monetary System were repeatedly realigned amid speculative pressures. In this environment, the institutional credibility of euro area membership is the strongest safeguard. It provides complete protection against exchange rate volatility with Bulgaria’s main trading partners in Europe and it shields Bulgarian firms from sharp currency swings that can erode competitiveness globally.
As a large currency area with much deeper financial markets, the euro area is far less vulnerable to sudden shifts in global capital flows than smaller economies. To put it into perspective: turnover in the US dollar-euro market is around 20 times higher than in euro-franc or euro-yen markets. This scale brings lower volatility.[4] At the same time, because the euro is the world’s second most important currency, the euro area pays for more than half of its imports in its own currency. In Bulgaria’s case, the share is even higher: around 83% of imports are invoiced in what will soon be its own currency. This cushions households and businesses from rising import prices when exchange rates move.
Finally, when global demand becomes less predictable, regional integration matters even more – and the single currency cements that integration. It prevents our internal market from being weakened by competitive devaluations. During the great financial crisis, for instance, the euro depreciated by about 20% against the US dollar. But according to ECB staff analysis, some countries might have seen their currencies fall by up to 14% more if they had stood alone. Such moves could have threatened the cohesion we have built. But thanks to the euro, Europe’s Single Market remained solid and united.
In short, the euro strengthens Bulgaria’s prosperity and reinforces Europe’s collective security in an increasingly fragmented world.
Managing the challenges of adopting the euro
Despite these benefits, the decision to join the euro area has not been universally welcomed. Surveys show that around half of Bulgarians currently oppose introducing the euro, while a small share remain undecided.[5] I take the concerns of the Bulgarian people very seriously – and I would like to address them clearly. Let me speak to two of the most pressing. The first is the fear of losing sovereignty – the fear that national monetary policy will be subordinated to European decisions. Given the lev’s long history as a symbol of Bulgaria’s independence, this feeling is entirely understandable. But joining the euro is not a loss of sovereignty – it is a gain.
For decades, Bulgaria has operated under a currency board. In practice, this has meant importing the monetary policy of larger economies, but with no seat at the table where those policy decisions are made. That will now change. The Governor of the Bulgarian National Bank will sit on the ECB’s Governing Council, with the same say, the same vote and the same responsibility as every other member. Bulgaria will no longer passively follow others – it will help shape decisions in the world’s third-largest economy.
At the same time, Bulgaria’s economy has become deeply integrated into European supply chains. Its business cycle now moves closely in step with that of the euro area. When the euro area grows, Bulgaria grows; when it slows, Bulgaria slows. In this context, a common monetary policy is not a restraint – it is a natural fit. The second concern is that adopting the euro will lead to higher prices. This concern is entirely legitimate. Currency changeovers can produce a temporary uptick in measured inflation, often when firms round up prices during conversion. People may also feel that inflation has risen, even when official data do not show it. This perception often stems from the prices we notice most – those of everyday items such as food and basic services – which can rise faster than the overall price level. But when strong safeguards are in place, the evidence is reassuring.
When authorities display prices in both currencies for a sufficiently long period of time, monitor actively and enforce penalties – as those in Bulgaria plan to do – the impact on consumer prices is modest and short-lived. In earlier euro changeovers, the impact was between 0.2 and 0.4 percentage points. Even in Croatia – which joined the euro area at a time when inflation was already high – the changeover effect was about 0.4 percentage points, and it quickly faded. Public perceptions show a repeating sequence. Before adoption, uncertainty is natural. But once households and firms begin using the new currency in their daily lives – and see that a credible central bank is safeguarding price stability – confidence grows.
In every country that has joined the euro area in the recent past, public support increased markedly within six months of the changeover. Today, support for the euro stands at 83% across the euro area.[6] In fact, when we look back at previous waves of euro adoption, the greatest risk countries faced was not losing sovereignty or seeing an increase in prices. It was losing reform momentum once inside the euro area and thus missing out on the full benefits of the single currency. But this lies entirely in Bulgaria’s hands.
If the country continues to align its institutions with the highest European standards and helps its firms integrate even more deeply into EU value chains, the gains will keep growing. During previous enlargement waves, EU countries that became more tightly integrated into cross-border production networks saw their GDP per person rise nearly 10 percentage points more than their less-integrated peers.[7] Reform momentum in Bulgaria has already delivered impressive results. The task now is to lock in that progress to ensure that it doesn’t fade as financing conditions improve and external pressures ease after adoption. By doing so, Bulgaria can go beyond reaping the benefits of its current strengths – such as competitive labour and land costs – and move towards becoming a hub for higher-value, innovation-driven growth.
Conclusion
Let me conclude.
Vasil Levski, Bulgaria’s most revered national hero, once said that “the people’s cause stands above all.” The decision to adopt the euro embodies that cause. It bolsters Bulgaria’s economic foundations, builds its resilience against global shocks and amplifies its voice in euro area decision-making, thereby strengthening its sovereignty. Given Bulgaria’s long-standing currency peg, the costs of forgoing an independent monetary policy are minimal, yet the gains are substantial: smoother trade, lower financing costs and more stable prices.
These advantages will particularly empower small and medium-sized enterprises as they expand within Europe’s integrated economy.
But gains are never automatic.
By ensuring a transparent changeover and sustained reform momentum, Bulgaria can turn convergence into lasting competitiveness, and translate that into higher living standards for all Bulgarians. In adopting the euro, Bulgaria is honouring Levski’s vision. It shows that through unity and shared strength, the country stands not only with Europe, but at the heart of Europe.
Thank you.

Bulgarian Ministry of Finance and Българска народна банка (Bulgarian NationalBank) (2025), “Minister Dilov: All Sectors Will Benefit from the Adoption of the Euro, and People’s Purchasing Power Will Increase”, 7 June.
InvestBulgaria Agency, Automotive industry.
Magistretti, G. and Vassileva, I. (2024), “Bulgaria in Global Value Chains: Leveraging Integration with the EU”, Selected Issues Papers, Vol. 2024, No 23, International Monetary Fund, 24 June.
Since 1999 the Swiss franc-US dollar rate has been about 2.6% more volatile than the euro-US dollar, and the yen-US dollar rate has been about 5.5% more volatile.
European Commission (2025), “Introduction of the euro in the Member States that have not yet adopted the common currency – Spring 2025”, Eurobarometer.
European Commission (2025), “Eurobarometer shows record high trust in the EU, and strong support for the euro and a common defence and security policy”, press release, 28 May.
Beyer, R., Li, C.Y. and Weber, S. (2024), “The 2004 EU Enlargement Was a Success Story Built on Deep Reform Efforts”, IMF Blog, International Monetary Fund, 3 December.

 
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According to the fifth Annual Report on Implementation and Enforcement of EU Trade Policy published today, the EU’s large network of trade agreements helps companies find alternative markets for their exports, while reducing dependencies in a challenging geopolitical environment.

The report, covering 2024 and the first half of 2025, concludes that EU trade agreements increase the resilience and competitiveness of EU economic operators:

• In 2024, goods exports to the EU’s 76 preferential trade partners grew twice as much as exports to countries not covered by a free trade agreement (FTA) – 1.4% vs 0.7%. For example, EU exports to Canada have increased by 51% since 2017 compared to 20% to the rest of the world.
• Total EU agri-food exports hit a new record in 2024, reaching €235 billion (an increase of 2.8% compared to 2023). Agri-food exports to preferential trade partners, worth €138 billion, increased by 3.6%, compared to 1.6% with non-FTA partners).
• EU trade in services with preferential partners has reached €1.3 trillion. According to the latest figures available (2023), it has increased more than three times as much as trade with non-FTA partners (+4.5% versus +1.2%).

EU trade agreements also support diversification and supply chain stability:

• Exports to some of our key partners such as Mexico, Norway, Switzerland, and the United Kingdom compensated for reduced sales of vehicles, vehicle parts and electrical machinery due to EU sanctions against Russia.
• At the same time, increased imports of gas and liquefied gas from Algeria, Kazakhstan and Norway, as well as imports of copper from Chile, helped fill the space left by reduced imports from Russia following the sanctions.

Preventing and removing trade barriers in third countries remains fundamental for growing EU trade. 44 such barriers were removed in 2024 alone. A total of 186 barriers has been removed since the Commission’s Chief Enforcement Officer was appointed in 2020.

Moreover, the EU is actively expanding its network of trade agreements. Two new EU preferential agreements entered into force last year – a free trade agreement with New Zealand, and an Economic Partnership Agreement with Kenya. This brings the total number of EU trade agreements currently in place to 44 (covering 76 preferential trade partners). The Commission also concluded negotiations this year with Indonesia, and proposed agreements with Mercosur and Mexico for adoption by the Council and the European Parliament. The EU is currently negotiating trade agreements with India, Malaysia, the Philippines, Thailand and the United Arab Emirates.

Background
The annual reports provide an update on the implementation and enforcement of EU trade policy. The fifth edition is accompanied by a Staff Working Document, which updates on the main developments in the EU’s preferential trade partnerships. The report showcases the impacts of the removal of trade barriers and resolution of disputes in third-country trading partners, including with the help of dispute settlement and the EU’s strengthened toolbox of autonomous enforcement instruments. It also highlights efforts to promote the advantages of the EU’s trade agreements for key stakeholders, in particular small and medium-sized enterprises, notably through the Access2Markets portal.

 
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Today, at the European AI in Science Summit in Copenhagen, organised by the European Commission and the Danish Presidency of the Council of the EU, Executive Vice-President Henna Virkkunen and Commissioner Ekaterina Zaharieva launched the pilot of RAISE – the Resource for Artificial Intelligence Science in Europe. This new virtual institute is a flagship initiative under the Apply AI Strategy and the European Strategy for Artificial Intelligence (AI) in Science. It will bring together essential resources for developing AI and applying it to drive transformative scientific breakthroughs: from improving cancer treatments to solving environmental issues, improving predictions of the impact of earthquakes, and more. The RAISE pilot will be funded with €107 million under Horizon Europe.
Drawing on the EU’s proven capacity to tackle complex challenges through collective action, RAISE will support the EU’s goals to put science and technology at the heart of its economy, maintaining its leadership in fundamental research, to let innovation serve humanity, and to welcome global talent to Choose Europe. As such, it will contribute to bolstering Europe’s competitiveness, driving it towards a new age of invention and ingenuity, and will reinforce its technological sovereignty.
RAISE by and for scientists
RAISE will be a virtual European institute, pooling and coordinating core AI resources, including computational power, data, talent and research funding across the EU Member States and the private sector, to drive both the development of frontier AI and AI-enabled scientific progress.
Key elements of RAISE are:
• Computational power: Access to AI computational power is important for researchers and startups in Europe. RAISE will secure dedicated access time to AI Gigafactories, through the financial contribution of €600 million from the Horizon Europe programme. RAISE will collaborate with the European High Performance Computing Joint Undertaking (EuroHPC JU) to guarantee availability and ensure priority for EU-funded research projects.
• Data: RAISE will support scientists to identify strategic data gaps and to gather, curate and integrate the datasets needed for AI in science.
• Excellence and skills: RAISE will attract global scientific talent and highly skilled professionals to Choose Europe. This includes €75 million under the RAISE pilot for Networks of Excellence and Doctoral Networks to train, retain and attract the best AI and scientific talent.
• Research funding: the Commission aims to double Horizon Europe’s annual investments in AI to over €3 billion, including doubling funding for AI in science.
The European AI in Science Summitwas also the occasion to present the first step of the RAISE pilot: the Coordination and Support Action for ‘Facilitated cooperation for AI in science,’ funded with €3 million by Horizon Europe. This Action will connect and interlink the AI in science community across Europe, to support the development of RAISE with and for researchers and innovators.
The Summit also marked the launch of a new Action under the European Research Area (ERA) on ‘Facilitating and accelerating the use of AI in science and research in the ERA.’ This ERA Action will support the setup of RAISE by providing a platform for coordination with Member States.
Next Steps
To accommodate the fast-paced changes in innovations and the shifting needs of the AI science ecosystem, RAISE will be built in phases, and will grow as its partners, resources, contributions and needs are evolving. Following the pilot phase launched today, the Commission will work together with the EU Member States, research stakeholders, including higher education institutions, and with the private sector, in view of further developing RAISE under the next long-term EU budget for 2028-2034, and ensuring its long-term sustainability, both in terms of governance and pooled resources.
Background
In October 2025, the Commission launched a European Strategy for AI in Science to reinforce Europe’s technological and scientific leadership, as well as its competitiveness, through harnessing the potential of AI technologies in science and supporting scientists to adopt them for their research. The Strategy contributes to the AI Continent Action Plan, and was presented alongside the Apply AI Strategy that aims at speeding up AI adoption in key business and industrial sectors.
In November 2025, at the European AI in Science Summit 2025, researchers, business leaders, investors and policymakers gathered in Copenhagen, Denmark, to advance Europe’s ambitious and responsible approach to AI in science. The Summit featured contributions from leading experts and thematic workshops on life science, materials science, planet and climate science, society and community, science for AI technologies and policy for AI in Science.
 
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Trade policy measures to enhance agricultural sustainability and environmental clauses in trade agreements are on the rise, reflecting governments’ efforts to enhance the sector’s long-term resilience. But a new OECD report warns that reducing agriculture’s environmental footprint while improving food security will require reforming support and redirecting public spending toward research, innovation, and sustainable farming. 
OECD Agricultural Policy Monitoring and Evaluation 2025, the global reference on government support policies for agriculture across 54 countries representing 75% of global agriculture value added, shows that total support to agriculture averaged USD 842 billion per year during 2022-24, which is 20% higher than the pre-pandemic period (2015-19).
The subsidies with the strongest potential to distort markets, such as price support for producers, payments based on output, and subsidies for inputs such as fertilizers or fossil fuels, declined in relative terms from 15% of the sector’s production value on average between 2000 and 2002, to 9% in 2022 to 2024. However, they still represent about half of the total support provided today.
Governments are increasingly using trade agreements as a tool to promote sustainable agriculture. Between 1997 and 2024, OECD members applied or approved 130 measures, mostly through regional trade agreements, with 60% of them being approved over the past seven years. The report recommends greater harmonisation of sustainability clauses across trade agreements to facilitate their implementation and monitoring, reduce compliance costs for businesses, and help ensure a level playing field for sustainable practices.
“To complement trade agreements that encourage sustainable agriculture, governments can replace market-distorting subsidies with better targeted support for research, innovation and sustainable farming practices,” OECD Secretary-General Mathias Cormann said. “This would boost productivity, improve food affordability and security, strengthen the environmental sustainability and resilience of agriculture, and sustain the livelihoods of millions of people who depend on the agriculture sector worldwide.”
The value of agro-food exports has grown to USD 1.4 trillion, nearly five times higher than three decades ago and outpacing production growth. However, agricultural products continue to face higher tariffs and quantitative restrictions compared to other sectors, as well as more non-tariff measures that may restrict trade. In 2021–2023, the Americas exported 40% of global agri-food value, while Asia imported 47%, driven by population growth, rising incomes and consumption and expanding urbanisation.
Government investments in agricultural innovation and other services – critical for meeting the sector’s productivity and sustainability objectives – remain low. In particular, public investments in agricultural knowledge and innovation systems have fallen to 0.54% of the sector’s production value in 2022-24, down from 0.92% in 2000-02, despite their role in strengthening the resilience of global agro-food value chains.
In the report, the OECD recommends a policy agenda to feed a growing global population in an efficient, resilient, and environmentally sustainable way. This includes:
• Reforming, reorienting, and phasing out where possible the most distorting forms of support.
• Reducing income support measures with low transfer efficiencies and prioritising targeted and tailored mechanisms for the direct benefits to farmers.
• Investing more in targeted innovation and sustainable productivity growth.
• Promoting broad approaches to resilience that ensure preparedness and risk management systems that respond to OECD frameworks.
• Promoting environmental protection and mitigation of negative environmental impacts, balanced with open and transparent trade and efforts to address the triple challenge facing agriculture.
The report includes detailed analyses for selected country and the EU, reviewing major policy developments in 2024 and early 2025 with the latest data on agricultural support including the composition of support and its changes over time.
For further information, journalists are invited to contact Yumiko Sugaya in the OECD Media Office (+33 1 45 24 97 00).
 
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Eurosystem moving to next phase of digital euro project
I am pleased to inform you that the Governing Council of the European Central Bank (ECB) has decided to move to the next phase of the digital euro project. This decision follows the successful completion of the preparation phase, launched by the Eurosystem on 1 November 2023, during which the interaction with the Committee on Economic and Monetary Affairs (ECON) has been invaluable. In that regard, we are grateful for the constructive feedback continuously received from the ECON Committee on the digital euro project. We have also taken note of the Euro Summit’s call to accelerate preparatory steps.1
The ECB Governing Council‘s final decision on digital euro issuance will only be taken once the legislation has been adopted. if the European co-legislators adopt the Regulation on the establishment of the digital euro in the course of 2026, a pilot exercise could start in mid-2027 ahead of a potential first issuance of the digital euro in 2029.
To deliver on this shared ambition, the Eurosystem will focus on three main areas in the coming phase:
• technical readiness: developing the digital euro’s technical foundations, including initial system setup and
• market engagement: collaborating with payment providers, merchants and consumers to finalise the rulebook, conduct user research and test the system through pilot
• legislative process support: continuing providing technical input to EU co-legislators and assisting the legislative process as
In the preparation phase that concludes on 31 October 2025, we built on the insights gained during the investigation phase and refined the practical design of the digital euro. Key achievements of the preparation phase include: (i) the development of the draft digital euro scheme rulebook, (ii) the selection of providers for digital euro components and related services, (iii) the successful running of an innovation platform for experimentation with market participants, as well as (iv) the investigation by a technical workstream into the fit of the digital euro in the payment ecosystem.
The further development of the draft digital euro scheme rulebook reflects the extensive market feedback received during the first review launched in January 2024. It covers both the functional and non-functional requirements – including requirements for minimum user experience, dispute management and application of the digital euro brand, along with detailed implementation specifications.
The selection of providers for the digital euro service platform (DESP) marked another key milestone. The sourcing process covered both externally procured and internally sourced components. The final cost of a digital euro – for both its development and operation – will depend on its final design, including components and related services that need to be developed. As a result of the work done in the preparation phase, the total development costs, comprising both externally2 and internally developed components, are estimated at around €1.3 billion until the first issuance, which is currently expected during 2029. Subsequent annual operating costs are projected to be approximately €320 million per year from 2029. The Eurosystem would bear these costs, as it does for producing and issuing euro banknotes – which, like the digital euro, are a public good. As in the case of banknotes, these costs are expected to be compensated by the generated seigniorage – even if digital euro holdings were small compared with banknotes in circulation.
The ECB also launched an innovation platform to explore how the digital euro could support innovation in payments and address new market needs. This collaboration and experimentation involved almost 70 market participants – including merchants, fintech companies, start-ups, banks, academics, public sector organisations and other payment service providers (PSPs) – highlights the digital euro’s potential to foster innovation and financial inclusion.
The investigation conducted by the ECB and market participants via the Euro Retail Payments Board, concluded that a digital euro could foster further competition in the European payments market. Besides directly benefiting from distributing the digital euro, banks and other payment service providers could leverage its open standards to expand their reach across the euro area without needing their own acceptance networks. They would also be able to co-badge the digital euro with existing payment solutions.
In addition, to ensure that the digital euro is designed to meet the needs of European citizens and merchants, the Eurosystem conducted extensive user research targeting vulnerable consumers and small merchants. The findings – available in a separate report published today – show the need for a simple, reliable and secure payment experience.
These results reaffirm the ECB’s commitment to developing a digital euro that works for everyone, empowering citizens, supporting innovation and strengthening the resilience of our monetary system.
Let me also emphasise that the decision to move to the next phase of the project does not constitute a decision to issue a digital euro; nor does it pre-empt such a decision or prejudge the outcome of the ongoing legislative process. A decision on issuance will only be considered at a later stage, once the legislation has been adopted. The ECB remains ready to support the legislative work through technical input, and to further engage with the negotiating team to facilitate swift progress.
Today we are also publishing a report entitled “Progress on the preparation phase of a digital euro – Closing report” that presents the main findings from the preparation phase and sets out the next steps. In addition, we are publishing dedicated reports of the three workstreams that concluded today: “Update on the work of the digital euro scheme’s Rulebook Development Group”, “Fit of the digital euro in the payment ecosystem report” and “ECB digital euro user research”. We will also publish further information and explainers on the digital euro web pages.
I would be grateful if you could share the reports with the members of the ECON Committee, including the members of the Parliament’s negotiating team on the single currency package and I look forward to continuing our collaboration.

Euro Summit (2025), “Euro Summit meeting (23 October 2025) – Statement”, 23 October.
External development costs until a first issuance are estimated at around €265 million.

Read original letter here.
 
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Governor Kathy Hochul today has been named to the 2025 TIME100 Climate list, recognizing the 100 most influential global leaders driving business climate action. View the full list on TIME’s website.
“I’m proud that New York’s work to build a cleaner, more resilient future is being recognized on a global stage by such an esteemed publication as Time Magazine,” Governor Hochul said. “Our approach is rooted in partnership and practicality: supporting innovation, protecting communities, and ensuring New York’s future is both sustainable and affordable.”
Building a Climate-Resilient Future
Governor Hochul served as Co-Chair of the US Climate Alliance from 2024-2025 and now serves on its Executive Committee, utilizing the Alliance to champion climate science and push back against federal resistance to climate progress. As a founding-state, New York has helped achieve the Alliance’s collective reduction of net greenhouse gas emissions 24 percent below 2005 levels. This historic emissions reduction milestone puts the 24 Alliance states on track to achieve its near-term target of 26 percent reductions by 2025, with New York leading the way.
Under Governor Hochul’s leadership, New York launched the New York State Adaptation and Resilience Plan, a first-of-its-kind, unified statewide initiative to prepare communities for the challenges of a changing climate. The plan coordinates efforts across state agencies to strengthen climate readiness through projects like shoreline restoration, resilient infrastructure upgrades and protecting critical assets from flooding, building upon funding from various sources including the $4.2 billion Clean Water, Clean Air and Green Jobs Environmental Bond Act and other state programs. As part of the Environmental Bond Act, the Governor has committed historic levels of resources to protecting New York’s coastlines through programs like the Coastal Rehabilitation and Resiliency Projects Program and Inland Flooding and Local Waterfront Revitalization Program (LWRP) Implementation Projects Program, which deployed over $30 million to fund essential coastline protection projects, utilizing nature-based solutions to combat erosion, flooding and sea-level rise.
Governor Hochul has also championed the Green Resiliency Grant program, dedicating millions in funding to support flood-prone communities. This competitive grant program prioritizes innovative, nature-based infrastructure like green roofs, permeable pavement and restoring natural habitats to help reduce stormwater runoff and mitigate flooding.
Through the Resilient Economic Development Initiative (REDI), the Governor is deploying $300 million to Lake Ontario and St. Lawrence River shoreline communities for resiliency projects in response to past extreme flooding and high water level events. Furthermore, her administration has provided the State action and leadership necessary to secure critical federal partnership with the U.S. Army Corps of Engineers (USACE), successfully advancing long-awaited, large-scale coastal storm risk management projects that will provide vital shoreline stabilization and protection for communities across the state.
Driving A Greener Economy and Green Jobs
Governor Hochul successfully launched New York City’s first-in-the-nation Congestion Pricing Program this January, which has reduced traffic, improved air quality and secured $15 billion for capital investments to the Metropolitan Transportation Authority. Additionally, under Governor Hochul’s leadership, New York is making historic investments in a greener economy through the $1 billion Sustainable Future Program, the largest climate investment in state history. The program accelerates New York’s transition to a clean energy economy, lowers costs for homeowners and small businesses, and creates thousands of family-sustaining jobs.
Key Investments Include:
• $150 million for the Green Small Buildings Program to help homes and small buildings install energy-efficient upgrades like heat pumps.
• $200 million through the New York Power Authority (NYPA) to finance renewable energy projects that expand clean power generation and lower ratepayer costs.
• $200 million dedicated to expanding thermal energy networks, which use a system of pipes to share heating and cooling resources among multiple buildings.
• $100 million for zero-emission school buses and an additional $100 million to expand EV charging infrastructure statewide.
• $50 million allocated to the EmPower+ to help low- and moderate-income residents make their homes more energy-efficient, while targeted investments in public schools improve air quality and reduce carbon emissions.
• Approximately 180,000 jobs, making New York among the nation’s leaders in creating clean energy jobs.
• Passing nation-leading Green CHIPS legislation providing up to $10 billion in incentives for semiconductor manufacturing projects that commit to environmental sustainability measures.
Advancing New York’s All-of-the-Above Energy Approach
Despite federal headwinds and post-COVID inflation and supply chain issues, New York under Governor Hochul’s leadership continues to chart a bold path towards a cleaner, more resilient and affordable energy future. By investing in a diverse mix of energy resources, innovative projects, and cutting-edge technologies, the State is expanding access to clean power that supports families and businesses. These efforts are creating cleaner environments and driving economic growth, ensuring that New Yorkers share in the benefits and advantages of a sustainable and reliable 21st-century energy system.
Key Initiatives and Accomplishments Include:
• Operating the nation’s first utility scale offshore wind farm, South Fork Wind, and advancing other offshore wind projects, including Empire Wind and Sunrise Wind.
• Exceeding the 2025 distributed solar goal of six gigawatts of solar ahead of schedule, solidifying New York’s leadership in the solar industry.
• Approving 31 large-scale solar and wind projects representing more than 4.2 gigawatts of clean energy, enough to power roughly 1.5 million homes.
• Signing the RAPID Act into law, consolidating environmental review, permitting, and siting of major renewable energy facilities and major electric transmission facilities under the Office of Renewable Energy Siting (ORES), cutting permitting timelines by up to 50 percent while maintaining strong local engagement and environmental protections.
• Constructing the Champlain Hudson Power Express Transmission line to deliver a significant portion of New York City’s electricity from clean Canada hydropower by mid-2026.
• Directing the New York Power Authority (NYPA) to build at least one gigawatt of new advanced nuclear energy, which will provide enough clean energy to power 1 million Upstate homes.
• Modernizing the grid by completing the Central East Energy Connect (93 miles) on time and $200 million under budget. The Smart Path rebuild (78 miles), upgraded lines to carry more power, hardening infrastructure against extreme weather.
• Expanding future infrastructure by modernizing 90 miles of lines including the Smart Path Connect, which is under construction with NYPA and National Grid, and Propel NY, a $3.2 billion initiative led by NYPA and New York Transco, which will upgrade underground and submarine lines through Westchester, Long Island and New York City, while incorporating community input at every step.
• Boosting reliability and saving money through transmission upgrades, like the Empire State Line in Western New York, which is moving gigawatts of clean power efficiently, improving reliability and saving ratepayers money. Since 2021, under Governor Hochul’s leadership, New York has completed or advanced hundreds of miles of new and upgraded transmission lines.
• Directed state agencies in August to work together to responsibly advance shovel-ready renewable energy projects as quickly as possible to take advantage of expiring federal tax credits.
Protecting Natural Resources and Strengthening Communities
Under Governor Hochul’s leadership in Fiscal Year 2025, New York State’s coordinated clean water grants and financing surpassed $3.8 billion in 2025 alone — an unprecedented investment that is transforming water systems in communities of every size. This includes Governor Hochul’s continued $500 million annual commitment to clean water projects.
Additional Key Investments Include:
• $26 million made available through the Climate Resilient Farming and State’s Ecosystem Based Management Program to help farmers reduce greenhouse gas emissions, improve soil health and protect water quality.
• Moving forward with the Governor’s 25 Million Trees initiative to enhance reforestation and green infrastructure statewide.
• $30 million in Environmental Bond Act funding for 19 projects across the state designed to mitigate flood risk, restore wetlands, and strengthen coastal and inland protections.
• Investments building on the $4.2 billion Clean Water, Clean Air and Green Jobs Environmental Bond Act, which directs at least 35 percent of all benefits to disadvantaged communities — ensuring equity remains central to New York’s climate agenda.
 

Compliments of the New York State Governor’s Office

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The Commission has adopted two measures to support the essential role institutional investors, such as banks and insurers, play in the financing the EU economy. 

These measures deliver on the roadmap set out in the Savings and Investments Union (SIU) strategy and contribute to the EU’s broader objectives of supporting private investment, improving capital market integration, and strengthening Europe’s long-term competitiveness, for the benefit of EU businesses and households.  

They aim at boosting equity investments by banks and insurers, including where these investments are made alongside public entities – such as the European Investment Bank or national promotional banks. 

Amendments to Solvency II rules 

The European insurance sector manages around €10 trillion of assets and is a key institutional investor. 

The amendments to the Solvency II delegated regulation encourage long-term investments by enhancing the investment capacity of insurers. This will allow them to allocate more capital to financing the real economy, while maintaining the robustness of the legal framework and the protection of policyholders. For instance, the delegated regulation includes a dedicated treatment for long-term equity investments by insurers to encourage the financing of European firms and facilitate their access to stable, long-term capital, including through private equity and venture capital. 

To support EU strategic priorities such as the green and digital transitions or security and defence projects, a new preferential treatment is also introduced for insurers’ equity investments under legislative programmes where public subsidies and guarantees are involved. Alignment with banking rules on legislative programmes regarding the eligibility criteria ensures legal certainty and predictability for both public and private investors. 

The review of the Solvency II Delegated regulation also removes unnecessary prudential costs for insurers when investing in securitisation. This is one of the four deliverables under the securitisation package adopted in June 2025 aimed at reviving the EU securitisation market. 

The amendments to the Solvency II Delegated Regulation will preserve insurers’ ability to offer long-term life insurance and pension products, by making the prudential framework more conducive to long-term, guarantee-based insurance business. Certain types of life insurance policies have an investment objective, helping citizens to get better returns on their savings and improve their financial well-being. 

The review also reduces administrative burdens by streamlining reporting and disclosure requirements, removing overlaps with other EU rules, and introducing more proportionality for insurers with simple business models. 

Legislative programmes under the Capital Requirements Regulation  

The Communication adopted today provides guidance on how banks can benefit from more favourable prudential treatment under the Capital Requirements Regulation (CRR) when investing in equity through legislative programmes — structured public investment schemes established under EU or national law. These programmes, which combine public backing (such as guarantees or co-investment) with private funding and clear oversight mechanisms, support sectors that are critical to Europe’s competitiveness and security, including clean technologies, digital innovation and defence. 

By clarifying how the relevant Article 133(5) of the CRR applies, the guidance promotes a consistent and transparent application across the Single Market. Banks investing under eligible legislative programmes will be able to apply a lower capital charge to these exposures, reflecting their reduced risk, while maintaining strong supervisory safeguards and financial stability. 

This initiative makes it easier for EU companies to access equity financing. It is also an important step toward a more integrated and diversified EU capital market — in line with the objectives set out in the Competitiveness Compass and the Commission’s broader investment agenda under the SIU. 

The Commission has set up a public register of legislative programmes, available on the DG FISMA website.  

Background 

In March 2025, the Commission adopted the Communication on the Savings and Investments Union (SIU), setting out a comprehensive agenda to deepen Europe’s capital markets and mobilise more private capital in support of EU priorities. The measures adopted today — the Solvency II Delegated Act and the Communication on legislative programmes under the CRR — are part of the deliverables under this initiative. 

Next steps 

The Solvency II amending delegated act is subject to scrutiny by the European Parliament and the Council over a maximum period of three months. This period can be extended by three months at the request of the European Parliament or of the Council. 

The amendments to the Solvency II Delegated Regulation will apply at the same time of the Directive (EU) 2025/2, namely from 30 January 2027.

 
Compliments of the European CommissionThe post European Commission | EU advances the Savings and Investments Union with measures to mobilise insurers’ and banks’ capital for Europe’s future first appeared on European American Chamber of Commerce New York [EACCNY] | Your Partner for Transatlantic Business Resources.