the euro, france and italy, like many 3 / 6 bis central bankers'speeches southern european countries, wrongly believed that it was possible to let up on competitiveness efforts, which are nonetheless an ongoing imperative – “ there is no free lunch ”. today we are suffering the consequences : we have lower economic growth and employment than some of our neighbours, such as germany and spain, which succeeded in carrying out the reforms necessary for enterprise ( corporate sector ), employment, education and expenditure reduction ( public sector ). contrary to what some say, our lag in growth is not due to excessive fiscal discipline. the government debt to gdp ratio has more than doubled in italy since 1980, and it has risen fivefold in france. when my generation was 18 years old, debt stood at 20 % of gdp in france. for your generation today, it verges on 100 % of gdp in france and in italy stands at over 130 %. we have failed when it comes to intergenerational solidarity and sustainable development. and as far as i am aware, neither france nor italy has become a champion of growth in europe. france and italy are lagging behind today because of a lack of national reforms. the euro cannot and will never be able to replace them. and this is good news since it means that there remains much room for our domestic policies, our collective debates, and our creative efforts. c ) european monetary policy fosters inequality for some, the ecb ’ s current low rates are generating social inequalities : savers who have put their money in fixed - rate products are being penalised by lower returns, while those who own shares or property are benefiting from the rise in asset prices. the reality is very different. first, because savers and asset holders are generally one and the same. second, and most importantly, because this very piecemeal analysis ignores the macroeconomic impact of monetary policy, which benefits us all. our measures create very favourable financing conditions, which are stimulating demand via consumption and investment, and speeding up the decline in unemployment. all this helps to reduce inequality, as unemployment tends to hit the poor and less - qualified the hardest. according to estimates, as a result of our actions, euro area economic growth was boosted by 1. 5 percentage points between 2015 and 2018. with regard to inequality, now is precisely the time for us europeans to talk about our experiences. we all share the same social model – to which we are strongly attached – combining

like to cover three important areas which touch upon the vital role of the research department in a central bank. first, i would like to talk about the challenges to our policy making in the context of the developments in the recent years, both global and domestic, that warranted robust data and research support. second, i would highlight some of the important contributions of the research department in these turbulent times. third, i would lay out several challenges ahead that one could anticipate, requiring reimagination and rebalancing of the research function within the reserve bank. 1 / 6 bis - central bankers'speeches i. recent challenges in policy making and research issues 5. given the enormity of the multiple shocks, the world before the pandemic appears to have become a distant memory, but i would like to start with a brief account of the key policy issues we were grappling with in the pre - pandemic period. the global growth momentum was losing steam and domestically we were experiencing a slowdown in growth. the key challenge was to understand the reasons behind the observed decline in growth and propose structural reforms and other policy changes. domestic inflation, on the other hand, was brought down, averaging 3. 9 per cent during the flexible inflation targeting regime ( june 2016 to february 2020 ). the research issue then was what factors contributed to the decline in inflation. another important policy challenge was the uncertainty about the time it would take to complete the balance sheet repair process ( or, the twin balance sheet problem of corporates and banks ), and its ramifications for growth and financial stability. globally, some of the empirical puzzles that received wide attention at that time were the weakening influence of economic slack on inflation ( or, whether the phillips curve is dead ) and little risk to inflation from quantitative easing ( or, the missing inflation conundrum ). widespread discontent about the negative spillover effects of globalisation had resulted in a growing shift towards protectionist policies, challenging the prevailing wisdom of greater openness to maximise economic welfare. 6. since march 2020, three major shocks – the covid - 19 pandemic, the war in europe and the aggressive tightening of monetary policy across countries – have posed very different set of challenges for economic research. policy responses had to be swift and wide ranging to contain the adverse effects on the overall macro - financial conditions as well as sectoral vulnerabilities. the first major challenge was data collection during the first wave of the pan