Isabel Schnabel, Member of the Executive Board of the ECB, gave the inaugural lecture at the EMU Lab at the European University Institute in Florence on February 16, 2024, where she addressed the challenges that have arisen to the success of the Economic and Monetary Union (EMU). Despite its initial success and widespread support among Europeans, the euro area faces a competitiveness crisis that has resulted in it falling behind in terms of productivity and technological development compared to other global economies, particularly the United States. The lag in technological innovation is hindering the growth and development of euro area firms, leading Schnabel to propose the elimination of remaining barriers to the free movement of goods, services, and capital within the European Union as a means to enhance competitiveness. She also discussed how factors such as Business environment, high barriers to entry, lack of external capital, and management practices are contributing to the euro area’s lag in innovation and productivity. Schnabel’s lecture highlighted the need for urgent measures to address these challenges and strengthen the euro area’s ability to create sustainable growth.
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