. something that i think is relevant, but is sometimes a bit overlooked, is that monetary policy is not almighty. if there is a problem with price stability, that ’ s within our mandate. but this is something everyone has to keep in mind to avoid creating expectations that will not be met : we do not have the philosopher ’ s stone. are you implying that having something of a policy mix would be good, in total respect of the ecb ’ s independence? sure. but my point is that wherever there is a problem, for instance a problem with trade disputes, that is a real economic problem that is going to have real consequences. you can certainly smooth the impact with monetary policy, but you will not be able to address and fix this kind of problems with monetary policy. the real role of monetary policy is price stability. and in order to guarantee price stability, we have to monitor the evolution of the real economy – domestic demand, external demand, the exchange rate, and the rest. but you cannot fix all the 1 / 4 bis central bankers'speeches economic problems of the world with monetary policy. president draghi hinted recently that if there is a slowdown and those downside risks materialise, fiscal policy might also play a role. yes, sure. it ’ s the policy mix. of course there is monetary policy, and we have been the main game in town since 2012. monetary policy has been key to understanding the recovery of activity and employment creation, among other things. but it ’ s not the only policy in place. fiscal policy has to play a role, as do structural reforms. and in the case of fiscal policy, it ’ s not only the nominal deficit level, it ’ s the composition as well : the quality of public finances. are you saying that the public investment - to - gdp share, which has remained flat, at 2. 6 %, during the qe years, could now increase? it ’ s not even only public investment. one of the problems in europe now is low productivity, which is caused by the fact that we are not investing enough in education, r & d and public infrastructure. but public infrastructure is not a stabilisation instrument. when you start building a road, for instance, the project is delivered much later, when the business cycle may have already turned. but education and r & d are levers that have to be used. and at the same time i think it ’ s important that we look at the

peter praet : economic recovery in the euro area – the role of monetary policy speech by mr peter praet, member of the executive board of the european central bank, at the belgian financial forum, university of antwerp, antwerp, 13 december 2013. * * * i would like to thank federic holm - hadulla for his contribution to the preparation of this speech. ladies and gentlemen, it is a great pleasure to speak to you at today ’ s event. i would like to use this opportunity to share my assessment of where we stand in terms of economic and monetary developments in the euro area. i will start with the economic situation we currently face and give you my take on the future outlook, also on the basis of latest eurosystem staff macroeconomic projections, which – as you know – play an important role in informing our economic analysis on a quarterly basis. we are moving on a trajectory of modest growth, gradually recovering from the economic downturn of the past years. still headwinds persist and i elaborate in a minute on the most important headwinds that we currently seeing. i will also discuss the signals coming from our monetary analysis, which assesses money and credit developments to identify risks to price stability over a medium - and long - term horizon. here, particularly the credit side presents itself as still sluggish, thus pointing to subdued price developments in the medium term future. finally, i will draw together the complementary bits and pieces of our analysis to explain our current monetary policy orientation, which is characterised by two features : first, that we expect our key interest rates to remain at present or lower levels for an extended period of time ; and, second, that we stand ready to adopt additional accommodative monetary policy measures, if and when necessary to safeguard price stability. our latest economic analysis let me start by briefly summarising how we see the euro area economy evolving, including an assessment of the latest eurosystem staff projections. the recovery continues to proceed at a modest and uneven pace across the euro area. in fact, real gdp is projected to pick up from the fourth quarter of this year onwards, and the recovery is expected to accelerate slightly by the end of next year. in the euro area as a whole, real gdp is projected to still contract this year by 0. 4 %, but then to increase by 1. 1 % in 2014 and 1. 5 % in 2015. according to our staff ’ s projections, the sustained increase in