It obviously underpins the rising populism, that reflects the dissatisfaction with the system that does not create equal opportunities for everyone, a system where reward is not merit based, i.e., system that gradually evolves into a crony capitalism. Against this background, I have no doubts that we have chosen the perfect spotlight for this Constituency meeting. Let me shortly use the historical lenses – what questioned the sustainability of capitalism and led to Marxism was the stagnation of wages and concentration of wealth in the early phases of industrial revolution. It gave ground for rising inequality, and as Thomas Pikketty, the so-called “Modern Marx” reveals in his book “Capital in the Twenty-First Century”, the only exception from this rising trend of global inequality is the period as of 1914 until 1970s, as a historical outlier. Indeed, actual data does indicate rising income inequality since the 1980s onwards almost across the board, although with different intensity. This turning point is very often associated with the end of the so-called “post-war egalitarian regime” around the globe. To bring the point closer, let me refer to the data retrieved from the 2018 World Inequality Report, which reveals that in 1980, the income share of the top 10% in the income distribution in Western Europe, North America, China and India was around 30–35%. By 2016, this percentage rose to around 35–40% in Western Europe, while the increase in the other regions was stronger, reaching 45%-50% of the total income.
Risk analysis and buffer-raising will also be a challenge for Eesti Pank in the forthcoming periods. The central bank just finished its first year as a member of the euro area, with one of the lowest equity to monetary policy assets ratios among euro area central banks. We must bear in mind that the revenues and expenditures of monetary policy operations are shared within the Eurosystem in proportion to the central bank’s participation in the total capital. The Supervisory Board of Eesti Pank thus resolved to raise the central bank’s capital adequacy ratio to the average level of euro area central banks in the long term. In order to bring the ratio into line with Eesti Pank’s participation in the Eurosystem, the capital adequacy ratio must be raised. This means that the central bank’s equity must be raised from 0.37 billion euros to approximately 1.3 billion euros. Eesti Pank’s equity currently stands at 0.07% of the Eurosystem’s total equity, while Eesti Pank’s participation in the Eurosystem stands at 0.26%. [QUO VADIS, EURO AREA?] 1. It is not only the central banks that can contribute to a successful exit from the crisis – the governments of member states must, as soon as possible, implement the measures taken and agreements made by the European Council and the euro area heads of state and government. Closer cooperation in the field of economic policy, along with clear-cut, functional rules, serve the interests of all members. 2.