peter praet : preserving monetary accommodation in times of normalisation speech by mr peter praet, member of the executive board of the european central bank, on " herausforderungen fur die europaische geldpolitik 2019 " at 33. internationales zinsforum 2018, frankfurt am main, 26 november 2018. * * * introduction in the aftermath of the global financial crisis, central banks have successfully fended off deflationary forces and supported economic recovery. 1 they have brought down policy rates to their effective lower bound and, importantly, have made use of a broad set of unconventional monetary policy measures in pursuit of their statutory objectives. in advanced economies, monetary policies have borne fruit, but their monetary policy cycles clearly differ substantially, reflecting different stages of recovery and degrees of progress towards achieving the central bank ’ s statutory objectives. in a number of places, central banks have already tightened their monetary policy stance ; unconventional monetary policy measures have been wound down and policy rates have been gradually increased. in the euro area, however, significant monetary policy stimulus is still needed to support the further build - up of inflationary pressures and headline inflation developments over the medium term. at the meeting of the ecb ’ s governing council in june, we gave an important signal of a normalisation of our policy instruments. we communicated our anticipation that, subject to incoming data confirming our medium term inflation outlook, we would end net purchases under our asset purchase programme ( app ) after december 2018. today i would like to address our key challenge in normalising our monetary policy instruments : preserving monetary accommodation, while switching back from net asset purchases to forward guidance on policy rates as the main instrument to steer our monetary policy stance. while this rotation proceeds, we will continue to operate with multiple, complementary instruments, including our policy of reinvesting the principal payment of securities purchased under the app. the state of the euro area economy following more than five years of increasingly broad - based economic expansion in the euro area, recent developments point to some loss of growth momentum. preliminary data show that euro area real gdp expanded by 1. 7 % year on year in the third quarter of 2018, down from 2. 2 % in the second quarter. the slowdown in euro area economic growth since the start of the year has reflected in no small part a retreat from the strong growth of 2017. one - off country - specific or sector - specific factors have also contributed to slowing production in recent months. but factors related to

card business in serbia in the course of the last four years are really imposing as is proved by the following : • number of cards issued has reached 5. 6 million and was increased by as much as 2. 2 million in the course of the last four years alone ; • half of the above number of issued cards are dinacards ; • almost 70 million transactions in serbia were performed via payment cards in the course of the last 12 months, of which 6. 5 million in may alone ; • there are over 50, 000 pos terminals, and • almost 1800 atms in serbia today. the time has come for us to make another step – a step towards improving the quality of payment cards business in serbia. this step shall certainly take place in the course of this year by way of improving quality of service and increasing the number of options on offer, like payment via mobile telephone or on - line, which has recently been enabled through the dinacard system. one of the major issues thrust upon us by the standards achieved so far in respect of card business in serbia, are the costs of payment system and the so called trade fees. in view of the fact that the level of guaranteed fee, interchange rate, to be retained by the card issuer in international card systems is disproportional to the level of fees in the eu member countries and that the gap will only widen further after a new set of rates is becomes applicable from 1 january 2008, the nbs has, following into the footsteps of the european central bank, decided to actively engage in improving efficiency of card payments and the resulting relationship between banks and trades people. i wish to inform you of the steps we intend to take to remove this anomaly, such as : • introduce a system of interchange rates from 2 september 2007 instead of applying fixed trade fees, that is a system in which banks and trades people will be free to regulate their mutual relations on their own. • make a comprehensive analysis of costs of payment systems as well as relations between banks and trades people in the course of next three months so as to be able to make an informed conclusion on the optimum level of interchange rate to be applied on the use of cards issued in serbia. on this occasion, however, the nbs invites banks to reach an agreement among themselves in the near future as to the applicable level of interchange rate that would provide for a more efficient payments system and to attempt to substitute nbs regulations by introducing self - regulating measures in this area. the