Ms Mairead McGuinness:

Good morning Chair and honourable members of the committee. I thank the Chair for recognising what has happened in Germany and the loss of life there. When I say that Brussels is grey and rainy this morning, it is an understatement. There have been very unusual weather patterns across the Continent. In Canada there are extreme forest fires. Maybe we will touch on the big subject of climate change in our conversations.

As the committee knows, my portfolio is financial services and it covers quite a broad range of policy areas. However, I am not long gone from being a Member of the European Parliament, so I come to this role with the parliamentary perspective. As First Vice-President, I was charged with engaging with national parliaments and I chaired many discussions with the national parliaments across the Union, which is something we need to do more of. My successor in the role is also deeply engaged, particularly now as we look towards the future and a conference on the future of Europe. National parliaments have a key role to play and no doubt this committee will do just that.

We are emerging, although not fully, from a pandemic that no one was prepared for. Those of us in the developed world should hang our heads in shame that we were not prepared for a global pandemic. We have had to catch up very quickly in terms of investment in public health. Equally, businesses have been so badly impacted by the pandemic that the old saying that health is wealth is absolutely true. In fact, some of the learnings from Covid-19 will feed into our discussions around climate change and the need for the financial system and corporates to move towards sustainability. In the past few businesses would have thought about investment in public health as being an important contributor to their bottom line and to their financial well-being. Whereas today businesses, large or small, know that public health measures have impacted, in some cases severely, and, in many cases, businesses may not reopen. The consequences of being vulnerable and not being resilient are being felt right across the system. Across Europe, both within member states and between member states, the impact of Covid-19 has been different, in particular in those countries that rely heavily on tourism and hospitality. The discussion in Ireland is very strong at the moment.

There was a difficult start with our vaccination roll-out. However, Europe should be proud of what we have achieved despite that difficult beginning. We have managed to export significant quantities of our production of vaccines from the EU to more than 90 countries. We are the only bloc to have done that. Others have put up barriers to the export of vaccines. I acknowledge the role of the President of the European Commission, President Ursula von der Leyen. She announced at the weekend that we have produced and delivered enough vaccines to cover at least 70% of the adult population. That is very significant. I compliment Ireland, the HSE and the Government for its roll-out of this campaign, which is regarded as one of the great successes. This is good because it will allow us reopen, but we are all conscious that new variants exist and more could happen. My sense is that we will be living with Covid-19, and learning as we go along.

Let me speak briefly about the recovery, because we are looking to this as well. One of the things that we prioritised was to make sure that the banks could continue to lend to businesses and citizens, so as much flexibilities as possible were brought into the system to accommodate that requirement. Equally, the fiscal supports that governments have provided, and monetary policy from the ECB, have both helped the banks continue to lend to the real economy. It is noteworthy that bankruptcies have declined during the pandemic. This is probably an indication that some supports are masking problems. We may see an increase in this problem as we come through the recovery. When we launched our non-performing loans strategy last December, I said it was really important for lenders and borrowers to talk early to see if there can be a restructuring or a situation where viable businesses that are vulnerable at the moment because of being closed can actually survive. That is a very important conversation happening across the member states.

In addition we have this Next Generation EU, with €750 billion being borrowed from the marketplace. So far, when we have gone to the marketplace as the European Union there is an avalanche of investors wanting to provide the finance towards our recovery, because of the stability of the Union. Equally, we are determined that the money is invested in the future. We do not want to invest to recreate the past or the status quo. We have to ensure that a significant part of the money is used for the green and for the digital transition. Indeed, we may discuss that in more detail.

My role is in financial stability, so anything that impinges on that is something that I have to be mindful of. I am also very conscious that the world is changing and the world of finance is utterly changing. For example, Covid-19 has accelerated digital transactions. Cash is not being used as much, but it is still important that people can use cash. We are seeing a big increase in the number of innovative FinTechs providing services traditionally provided by banks. I am having a discussion regarding an ideas forum on what that means for the future. Many central banks, including the ECB, are looking at digital currencies, and we are slowly rolling out that process of trying to navigate what it might mean for the financial system.

At the global level, I refer to the work I do around sustainable finance, which is greening the financial system, to invest in green. This week I had very good discussions with Ms Yellen, Secretary of the US Treasury, during her trip to Brussels. The work Europe is doing around climate change, environmental degradation, and making the finance flow towards sustainability, is leading at global level. What we need to do is make sure that other countries are with us on that journey, because Europe alone will not tackle climate change. If we look to what is happening around the world in terms of weather events, people know there is something there that we need to tackle.

Yesterday we launched quite a significant package, Fit for 55, to achieve a reduction in emissions by 2030 by that very ambitious 55%. There is much activity, and the financial system, is absolutely key to us achieving those very ambitious targets.