What Now, Europe?

As it faces the exigencies of an existential war, Ukraine is confronted with stark fiscal and financial policy trade-offs, despite the mitigation provided by large-scale external financial support. So far, its authorities have kept monetary and financial stability under control beyond a relatively brief initial episode of turmoil in 2022. What is the broad fiscal equation for Ukraine looking forward, taking into account uncertainties about European funding beyond 2027? Can domestic revenue be raised? Is International Monetary Fund conditionality effective and appropriate? What is the state of the banking sector? Can Ukraine maintain stability after an eventual ceasefire or peace agreement? How will it fund its massive reconstruction needs?

The idea of Europe as a community emerged many centuries ago, but its meaning keeps changing—to Europeans and non-Europeans alike. Juliet Johnson has pioneered research on the changing role of European symbols such as the 12-starred flag, designed in the 1950s and formally adopted by European institutions in the 1980s. Intriguingly, shifts in meaning have often first occurred on Europe's eastern side, before being adopted by Europe's western "core." What does it mean to be European today, in a fast-changing geopolitical environment and amid debates on which new member countries the European Union may incorporate? Can longstanding and newer EU members share similar visions of Europeanness? How do changing identities affect EU policies and market outcomes?

The European Central Bank (ECB) is working on a digital version of the euro, a project started back in 2020 that is coming closer to fruition as the enabling EU legislation progresses. The ECB has designed a digital equivalent of cash, aimed at complementing physical euros for day-to-day payments. Its approach may be compared and contrasted with the US Federal Reserve's reluctance to introduce a digital dollar and with the People's Bank of China's definition of the digital yuan largely as a bank deposit. Has the ECB's rationale for the digital euro evolved over time, from a response to tech challengers, such as Facebook's Libra project in 2019, towards a more geoeconomic motivation of reducing critical dependency on non-EU payment service providers? What are the main features of the digital euro as currently considered? When will it be concretely introduced, and what are the risks and opportunities in Europe and globally?

The European Union has not admitted a new member state since Croatia in 2013, while the United Kingdom left the block in 2020. Enlargement, however, is now back on the EU agenda. Western Balkan countries such as Montenegro are coming close to EU membership, and the new geopolitical context has fostered a reconsideration of the EU enlargement approach altogether. What factors will determine which new countries will join the European Union and when, and what are the next steps?

European leaders are waking up to the imperative of ensuring the continent's defense in a changed geopolitical environment. But they face complex trade-offs in terms of how to manage the corresponding transition and build the institutions needed for efficient defense procurement, threat assessment, and strategic planning.

Since the 2024 publication of reports by senior statesmen Enrico Letta and Mario Draghi, the European Union has been debating how to improve its competitiveness and foster more high-growth companies. Together with France's Christian Noyer, former German Federal Finance Minister Jörg Kukies has led an in-depth investigation of policy options to that effect. This session discusses their findings and recommendations.

In 2012, Anu Bradford coined the expression "Brussels effect," echoing earlier intra-US references to a similar "California effect"—namely that the global significance of the European market allowed the European Union to shape market regulations worldwide. Is this concept still relevant in a world that appears to have entered a phase of fragmentation?

Ukraine is on a path towards membership in the European Union—subject of course to the outcome of the ongoing brutal war of aggression by Russia. In this inaugural session of PIIE's new Europe-focused live podcast series, we will discuss the challenges and trade-offs both for Ukraine and for the European Union, with a leading government adviser and civil society advocate who was Ukraine's deputy infrastructure minister between July 2022 and October 2024.

Europe faces a turbulent new era of economic, security, and governance challenges. Join Nicolas Véron, senior fellow at the Peterson Institute for International Economics, for a live podcast with experts and practitioners diving into Europe's economic future in a changing world.   What Now, Europe? launches on September 23, 2025. Register at piie.com for the first episode (https://www.piie.com/events/2025/ukraines-future-european-union) to join the live recording or listen anytime wherever you get your podcasts.    From the Peterson Institute for International Economics.    Music by Lightbulb Moment/Eden Avery/Courtesy of Epidemic Sound