By Xavier MUSCA – Deputy CEO of Credit Agricole, Chairman of Amundi


The 2017 Amundi World lnvestment Forum concluded with a speech by Xavier Musca, Deputy CEO of Crédit Agricole and Chairman of Amundi. Focusing on geopolitical risks and economic imbalances, he affirmed that Europe is well positioned to face the challenges and should assume its global leadership responsibilities.


Harking back to the hopes that were raised by the fall of the Berlin Wall, of a safer and fairer globalized world with stronger economic growth, Mr. Musca acknowledged progress, especially in emerging countries. However, globalisation has created a sharp increase in inequalities. The wealthiest 1% of the world’s population today owns as much as the rest of the world, and in the decade to 2014 real incomes remained stagnant or fell for nearly 70% of the population in the 25 most advanced economies.

The 2008 crisis worsened the situation and the general population has become more anti-establishment, rejecting globalisation and multilateralism. “Forces that deny the legitimacy of the worldwide framework are now gaining strength,” he emphasized. “Negotiations of the WTO are stuck, protectionism has ceased to be taboo, the framework of Basel is being questioned, and financial deregulation seems legitimate again.” The election of Donald Trump is one manifestation of this, and Europe has not been immune, with rising nationalism and less solidarity.

« We believed that the world that emerged from the collapse of communism would see the end of history, but instead of a reconciled world, we are seeing the rise of geopolitical tensions and terrorism. »


However, and wanting to end the conference on a positive note, Mr. Musca underlined that Europe is well positioned to face these challenges. Economies are growing and unemployment is falling, inflation is under control, and interest rates remain low, leading to increased investment. This should help alleviate social and political pressures, and reassure foreign investors. In addition, Europe has finally found a pragmatic way to deal with troubled banks, as shown by the Banco Popular story in Spain, and progress in Italy. “The good news is that banking risks are becoming specific and not systemic” he emphasized.

Nonetheless, there is no reason to be complacent. Productivity growth remains low, and financial instability could reappear if the eventual exit from quantitative easing is not handled correctly.

On the political front, the good news is that the danger of the European Union disintegrating has vanished, as proven by the elections in Austria, the Netherlands and France. “Faced with the dangers, Europeans have closed ranks. Brexit and the scepticism displayed by Donald Trump also played a role.” In Germany, Spain, Italy and France, governments are trying take advantage of the economic momentum to pursue reform and strengthen integration. Their action is both necessary and likely to attract public support in areas such as defending the social model, strengthening security, reinforcing the single market, and deepening monetary union, said Mr. Musca.

« I am really convinced that in this challenging environment, Europe is better positioned than it has ever been. »

With regards to the social model, there is wide agreement that it should be reformed, even in France. There is also the desire to protect Europe from the explosion of inequalities that led to populism elsewhere. “We are, I think, all convinced that we have to protect ourselves against the risk of populism,” he emphasized.

Increasing geopolitical risks and the nationalist focus of the US gives Europeans no choice but to step up their cooperation on security and terrorism. Paraphrasing Enrico Letta, Mr. Musca posited that “Trump would even have a place among the founders of European integration.”

Brexit, on the other hand, is an opportunity to reinvent the single market, since Europe’s main financial centre will no longer be in the Union. In fact, rethinking how financial Europe works will be a necessity, he underlined.

Concerning climate, Europe is already ahead, with China following closely behind. Decarbonizing the economy will provide Europe with real development opportunities and could strengthen political cohesion.

And finally, Mr. Musca praised the emerging Franco-German consensus on the need to move forward with monetary union. Although it is not clear what measures will be taken, it is another sign that Europe is in the process of getting back on the right track.

« If we continue too long with quantitative easing, it will be a real threat to financial stability; but we also see, even in recent days, that exiting QE will be extremely delicate and challenging. »