benoit cœure : interview in le figaro interview with mr benoit cœure, member of the executive board of the european central bank, in le figaro, conducted by ms alexandrine bouilhet on 4 april 2014. * * * le figaro : isn ’ t the strong growth seen in the financial markets out of touch with economic reality? benoit cœure : markets are anticipating economic recovery. that is a good sign, and we think they are right! it is not a bad thing in itself to anticipate a recovery! we at the ecb believe that the recovery is already underway, albeit a gradual and fragile one, and so we want to accompany it with low, or even lower, interest rates for a prolonged period. is this strong growth not already creating bubbles? in our opinion, no – not in the euro area. but, in a period of very low interest rates, there is a need for vigilance. if this risk were to materialise, supervisory authorities in the member states have new “ macro - prudential ” instruments at their disposal, not to mention the other macroeconomic measures. is the ecb really ready to start quantitative easing ( qe )? yes, the governing council is unanimous in its commitment to using unconventional instruments, including qe, if the current period of low inflation extends for longer than expected. we do not consider that necessary at present, because the low level of inflation is partly due to temporary factors and we believe in the recovery : inflation should therefore increase. but we will continue to monitor developments very closely and act if required. how can qe help to increase lending? that is the question! even if qe means there is more liquidity on banks ’ balance sheets, there is no guarantee of that increasing lending. the ecb cannot be a substitute for putting the banking sector back on a sound footing. the review of banks ’ balance sheets that we are carrying out in 2014 will help. qe in the european context would inevitably be different to the approach taken in the united states. on that issue, mario draghi has weakened the euro. why? market participants have now fully understood that the exchange rate is not an objective of our monetary policy, but it is nevertheless an important variable in our decision - making because of its influence on price developments. in a period of low inflation, the effects of exchange rate developments are closely monitored. what should be done to weaken the euro further? another reason

##es ladies and gentlemen, commercial bank lending to private sector businesses currently stands at just over $ 2. 0 billion. our records show that of this total, the 15 largest business loans from each of fiji ’ s four commercial banks make up close to 60 percent, while lending to micro businesses and smes account for just 8 percent. there is definitely room for this to grow. i am particularly pleased to highlight that commercial banks have already given around $ 10 million in loans under the sme credit guarantee scheme since the facility was introduced in january this year. with an interest rate pegged at no greater than 10 percent per annum this should greatly assist businesses. we hope that within 5 years, the share of sme loans would double to around 16 percent of total lending. anz sme scheme ladies and gentlemen, i understand that anz ’ s commitment and work in the sme sector is something that has been honed over the last 5 years, with particular focus on streamlining processes and improving access to affordable finance. the creation of a 20 - staff sme team to serve all parts of fiji will positively impact sme growth in both credit and numbers. in addition, anz ’ s efforts in working together with local regulators and sme operators is welcome news for sector engagement towards sme development. the reserve bank is always grateful to financial institutions that assume additional responsibility and take the initiative in accommodating government and rbf supported policies, as this portrays an alignment of our goals in taking the economy forward. the reserve bank is confident that the combined efforts of anz and other financial institutions in taking the new scheme on board, will act as a platform for sme growth and is a step towards realising his sector ’ s true potential. in closing, i wish your team every success in the launch of this new product and thank anz bank for the continued confidence and commitment towards the development of both the sme sector and the fiji economy. vinaka vakalevu. bis central bankers ’ speeches