Conciliatory but firm, optimistic yet realistic, but overall convinced that a win-win solution can be found to US-EU trade issues is the overall impression portrayed by Paschal Donohoe, Ireland’s finance minister, currently a candidate to seek a third term as President of the Eurogroup of 20 member countries of the Eurozone, and which includes, as individual members, the President of the ECB, France’s Christine Lagarde, and the EU Commission’s Economy Commissioner, Latvia’s Valdis Dombrovskis.

He is seeking a new term in office, which, if confirmed, will start for a two and half year term on July 12th forthcoming, and which will overlap with Ireland’s Presidency of the European Union due in the second half of 2026.

Minister Donohoe agreed to do the interview for the 2025 Finance Dublin Yearbook on the theme of the issues facing Europe, Ireland and indeed the world with a medium term outlook, covering the period out beyond Ireland’s forthcoming Presidency of the EU.

We conducted the interview with the Minister at his offices in Dublin on 26th May 2025, presented here in a Question and Answer format.
He began: “I am currently a candidate to continue with my work as President of the Eurogroup and over the last number of years we have seen the euro and the Eurogroup confront so many different challenges and opportunities, from the pandemic to the aftermath of very high levels of inflation to all of the changes that are happening now in global trade and in the global economy.

“I believe great opportunities await the euro and Europe despite the many challenges that we are facing. I am asking my colleagues for the opportunity to continue to work with them to deal with the challenges that we have and to make the most of the opportunities.

Q: What major challenges do you see the Eurogroup and yourself facing?

“The major challenge that we face are all a consequence of what is happening with the global economy. We have for example the rules in relation to global taxation all beginning now to change and this has very very big consequences for a very trade intensive part of the world, such as Europe, and for political projects such as the European Union.

“So, they are the challenges that we need to rise to, but on the other hand there are also great opportunities, and those great opportunities are: the resilience of the European economy, the amount of innovation that is happening within Europe at the moment and then the long-term resilience that is created by a political project such as the EU.

What I want to do is make the case for those opportunities and for the work that we can do while at the same time dealing with the challenges and difficulties that we know are there.

Q: There has been some criticism emerging from the United States last week about the European Union not being able to act together in recent discussions in regard to trade. Do you see their point?

“I understand if you are dealing with an interlocutor that it is a collection of democracies, I understand that you can find that negotiation very different to dealing with a single country,

“However the economic consequence of dealing with a collection of democracies is that you are dealing with a trading block that is far bigger than a single country. And while it may therefore take a bit more time to have that negotiation with a project such as the European Union, the economic benefits of reaching agreement are big because we’re such a big part of the global economy.

“I can understand why the negotiation is very different to having a negotiation with a single country but because we are representing a group of countries, the economic benefit of concluding negotiations successfully is also really big and that benefit would definitely outweigh any additional time that is needed to get to a successful conclusion of the negotiation.

Q: Could you see a possibility down the road that people are saying for example that the American approach is purely tactical and that we could later on, maybe in six months time, get to a place where we could see us getting somewhat back to where we were a year ago?
Also would you agree that the Americans do possibly have some grievances on the trade front with regard to the European Union. Are any of those things that could be addressed?

“Certainly I believe it is a very realistic objective from us to get back to trade that has lower levels of tariffs on it and is friction free. I’d have to say at the moment that the journey to getting back to that point is probably very long and complex and we have an awful lot of work ahead of us in order to get back to a trade world that in any way resembles the trade world that existed under previous American Presidents.

“But that being said I think it still is very realistic to expect that we could get an agreement with the United States and we can get to an agreement with the US that does minimise the trade frictions that are there and does create certainty regarding how trade between the EU and US will grow in the time ahead.

“So, yes, I think it will be a very long road and a difficult road at the moment to get back to the world that we had in recent years.

“Instead what I think is more realistic is how we get to a place that is better than today. I believe we can do that and I believe that is achievable in the weeks and months that are ahead.

Q: What would be the essence of that success? What would be needed to be done at an EU level?

“I think that at an EU level its trying to create an agreement that would be mutually beneficial. It would look at how we would try to deal with perceived issues of unfairness regarding the trading deficits that exist with the US. I would underline that it would have to be something that is acceptable to the EU as well.

“What would it look like? I think there are a number of different strands to it. The first one is how we can have tariff levels that are an awful lot lower than we’re being confronted with today. The second one is looking at ways in which the EU might be able to buy more from the US, and then thirdly looking at policy areas that are creating difficulties in trade on both sides of the Atlantic.

“ There is an appetite within the EU to look at this, but I have to again emphasise that we would need an outcome that would work for both the EU and the US.

Q: Can you see the World Trade Organisation having a role, or is it peripheral?

“The negotiations that we are having at the moment do appear very much to be bilateral but as a country that is very committed to a multilateral global trading system I do believe the WTO should play a key role.

“I think one of the issues we need to look at as we assess how we can recover from the trade uncertainty that is there at the moment is the support of the WTO and to support it having a role in resolving some of these difficulties. And, again that does not feel imminent given where we are today, but I still believe it is achievable.

Q: In relation to giving concrete reality to the Draghi Report, how might we make Europe’s Capital Markets ‘Great Again’? In particular, what are the potentials of the Savings & Investment Union (SIU), which we might see as a rebranding of the EU’s’ Capital Markets Union’ project?

“There is huge potential behind us and if I was to look at the ways we can do it and identify two. The first one is the decisions that we can take on a national level that will support the development of capital markets within the EU, measures that we can take to incentivise citizens at a national level to invest in different ways for their own future.

“The second strand is how we will respond back to the many excellent proposals that have come from the Commission in relation to how we deepen our own capital markets and that refers to for example proposals that the Commission will be bringing forward to revitalise the European securitisation market and by doing that to hopefully allow banks to lend more and to contribute more to the scaling up of companies within Europe.

“I have never seen such a level of interest in this project as we have at the moment and I am certain that we can make progress on this and it is one of the really clear ways in which we can respond back to the opportunities that are laid out in the Draghi Report.

“The Commission will be bringing forward proposals in this area in the coming weeks - about ways in which we can develop a Securitisation market in the European Union.

Q: There are articles also in the edition of the Yearbook on these opportunities, you have seen drafts of these, and what are your thoughts on these suggestions, for example an article by A&L Goodbody lawyers on the topic?

“That’s just a very good example of how the development of the Securitisation market at EU level would also offer great national opportunities and benefits as well and that is why I think Ireland has so much to gain from the opportunities of the development of the savings and investment union. Certainly we want to go into it in a very positive and constructive way because we believe that not only can Ireland strengthen the capital markets of the European Union, we believe by strengthening them there are great opportunities for Ireland to benefit as well.

Q: There are also references in some of the other articles, for example in the Dillon Eustace article on Fund Tokenisation, and AI and indeed various references in the other articles to the Department’s own white paper, “Funds Sector 2030 Review” published last year by the Department of Finance team under Michael J McGrath and Brian Corr. How do you see those contributing?

“We have a very good funds strategy that was launched by the Department of Finance a number of months ago and I am very committed at looking at how we can implement that strategy in the time ahead. When it comes to technology and the use of, for example tokenisation and other ways in which technology can help finance here in Ireland it is something I am supportive of and the work that the Central Bank has done in relation to an innovation sandbox shows the attitude that we have to looking at how we can create benefits and new technologies. There are risks, there are regulatory issues that we need to consider, but I am certain here in Ireland we can get the balance right and we can deal with risks that could be there whilst at the same time availing of opportunities as well.

Q: One of the reactions from readers of your Department’s Funds Industry Review last year was that they welcomed its recognition of the phenomenon that it observed for Irish households sometimes that when they’re making decisions about how to invest their money, they can get overly preoccupied about tax to the extent actually that they don’t focus enough on the investment itself.
In this light, do you agree that tax should be transparent to the achievement of things like pensions consolidation etc?

“Any economic decision has a taxation element to it and the issue that they are raising here as I understand it is the taxation regime that we have in place now for with regard to people investing in their own future. These are all issues that are considered budget to budget and they will be considered again when we approach Budget 2026.

“I do think there is a generational shift on the way. I do think that younger people are more aware of the opportunities that are there to save in new and creative ways and they are aware now, due to the impact of technology and the fact that they can look at their phones and see what is happening in stock markets and they invest in far quicker ways then would have been possible in the past.

“What the Funds Review does is highlight a number of different issues that the Department has agreed to consider in regard to how we tax those investment decisions but all I can say for now is like any other taxation decision, these matters will be considered as part of preparing the Budget and the Funds Review that is put in place by the Department does lay out a number of serious issues that we are considering.

Q: Finally, to conclude on an issue central to discussions that are likely to take place in the context of the Eurogroup in the coming two and a half years, what would you say to the question as to whether Europe should aspire for the euro be a global reserve currency?

“I think of it in terms of decisions that we can make relating to the strength of the euro. I think about it in very practical terms as well because the more stable and successful a currency is the more it can contribute to the development of living standards within a country or collection of countries.

“It can do that by raising stability, that allows good investment decisions to be made. And, when I think of what that means for the euro it means a number of particular decisions that can be made later on in the year.

“It means can the euro get bigger? Can there be more countries in it? It means are we willing to make decisions regarding the digital future of the euro - I believe we will make important decisions in that area soon, and then finally it relates to, do we aspire for the euro to be more of a currency for trade in the future and given the case that the European Union is making for the value of trade, the role of trade in delivering additional jobs, in delivering economic growth and us seeing global trade in very positive terms. I think that attitude alone would create an opportunity for the euro to be even more successful in the future.

Q: Would you have a commitment to the idea of the euro as sound money, - already, for example over the past five years it has been broadly stable against the dollar for example, the period of your two previous terms as President of the Eurogroup?

“During my five years as President of the Eurogroup I think the euro has already shown that it can be a stable currency. We have shown this by our ability to overcome many different crisis from the global financial crisis onwards. The long-term aim for the euro is to continue to be stable and to make decisions that strengthen it further and that is what the Eurogroup is involved in doing.

“The value of currencies is determined by many different factors, and I think what is important is that we look at the decisions that we can make that will strengthen the economy and the euro and by strengthening the economy in the euro area it can be beneficial for Europe and that is about how we can have the right budget policy for the European Union. It is about how we can make good decisions regarding the euro having a digital future, it is about having a stable environment within Europe to facilitate good investment decisions to be made, and that is where our focus is”.