quality and stability of the basic conditions. depending on the development of the political situation, the global economy may thus recover at a faster or slower pace than we anticipated, and the exchange rates might be subject to major fluctuations. in this case, the national bank would have to review its monetary policy. in the short run, the price of oil will also have a considerable influence on inflation. if it continues to erode, measured inflation might fall below zero for a few months. should this situation arise, it is important to bear in mind that it cannot be equated with sustained - and thus economically dangerous - deflation. on the contrary, a low oil price level would create a positive supply shock and, under the current circumstances, would impact favourably on production. inflation would be dampened temporarily. we also keep a close watch on the development of the money supply m3 in order to assess the medium - term inflationary risks. following a phase of low, or even negative, growth rates, m3 is now expanding at a somewhat faster pace. so far, however, there has been no excess supply of liquidity in the economy, and the money stock m3, therefore, does not point towards inflationary risks at present. finally, i would like to make some closing remarks about the imminent introduction of euro notes and coins. for about three years now, the euro has existed as deposit money. it has led to fixed exchange rates and a uniform interest rate level in the euro area countries. the introduction of euro notes and coins will have additional positive effects on the economic development in europe, as it will be easier to compare prices and confidence in the new currency will be strengthened. moreover, the euro is to be regarded positively not only with regard to the swiss economy but also swiss monetary policy. the swiss export sector will profit from lower transaction costs, and currency devaluations - as previously implemented by some european countries in order to improve their competitiveness - will be a thing of the past. swiss monetary policy will benefit from the fact that a large economic bloc now exists in europe which pursues similar goals in terms of monetary policy. all in all, exchange rate fluctuations between switzerland and the emu countries should thus remain below the levels seen before the launch of the euro. furthermore, the markets will realise in due course that there is no reason why the swiss franc, with regard to the role as a safe haven currency, should be assessed differently than the euro. this realisation should reduce

yves mersch : european economic governance - early lessons from the crisis keynote speech by mr yves mersch, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at the conference “ the werner report, 50 years on ”, organised by the luxembourg centre for contemporary and digital history in cooperation with eui, 8 october, 2020. * * * introduction in my remarks today, i will focus on three elements which i believe could outlast the eu crisis response – and could perhaps form pierre werner ’ s legacy. a substantial crisis response at european and national level with a threefold legacy europe ’ s historic response to today ’ s unprecedented crisis not only coincides with the 50th anniversary of the werner report. it also puts the report ’ s economic reasoning into practice. in werner ’ s view, monetary integration had to be accompanied by a partial europeanisation of fiscal policy. such europeanisation does not necessarily imply full harmonisation. as set out in the treaty on the functioning of the european union, it means that countries coordinate and conduct their national economic and fiscal policies in a manner that contributes to maintaining the stability of the eu as a whole. the policy responses to the pandemic respect these principles and hold important lessons for the future. the european - level response has been substantial. the ecb has taken far - reaching exceptional monetary policy decisions. the pandemic emergency purchase programme, targeted longerterm refinancing operations, and pandemic emergency longer - term refinancing operations have provided over €2 trillion in liquidity since march – and we also decided on changes in the collateral framework. we estimate that, by the end of 2022, all of these measures will have increased real gdp growth in the euro area by around 1. 3 percentage points and inflation by around 0. 8 percentage point. our crisis - related supervisory decisions are freeing up some €120 billion of bank capital which could be used to absorb losses or potentially finance up to €1. 8 trillion of lending. the european commission and the member states in the council took decisive measures to support national governments, firms and workers, helping to cushion the immediate impact of the crisis ( especially through three safety nets, namely the european stability mechanism pandemic crisis support instrument, the european investment bank pan - european guarantee fund and the european instrument for temporary support to mitigate unemployment risks in an emergency ( sure ), which together amount to up to €