effects when monetary policy is at the lower see cœure, b. ( 2014 ), “ structural reforms : learning the right lessons from the crisis ”, keynote speech at the economic conference, latvijas banka, riga, 17 october. see https : / / www. imf. org / external / pubs / ft / sdn / 2015 / sdn1522. pdf. bis central bankers ’ speeches bound. that is because they act more on fixed costs than marginal costs, and hence have less impact on prices and real rates. for example, measures such as judicial reform or opening up closed professions are likely to primarily boost investment – and hence productivity – with little disinflationary effect. for all these reasons, and as i have said on several occasions11, seeing rebalancing as all about cutting costs – which is what policymakers often think of as “ competitiveness ” – is misguided. productivity growth is central to competitiveness and to growing out of debt. this is confirmed by the imf exercise i just mentioned : the benefits of wage moderation diminish as more countries engage in it, whereas if all countries engage in structural reforms to raise productivity the benefits are large and uniform. among the structural reforms that reduce fixed costs, one that is likely to have the strongest impact in the current environment is improving insolvency regimes. this would help tackle the debt overhang for viable firms by reducing the costs of debt workout. and it would also allow non - viable firms to fail faster, supporting reallocation to more productive ones. this is the message of a recent analysis from the european commission, which finds that a good insolvency framework is associated with speedier adjustment of non - performing loan ratios. 12 symmetrical rebalancing that said, it is also clear that sustainable rebalancing cannot only involve measures in crisishit countries. rebalancing has to be somewhat symmetrical, i. e. surplus countries also have a contribution to make. such a contribution is partially about strengthening domestic demand, though we know that spillovers to crisis - hit countries through higher imports are likely to be small. 13 but what is more important, in my view, is the role of surplus countries in supporting euro area price stability – i. e. an inflation rate of below but close to 2 %. this would allow the remaining relative price changes within the euro area to take place against a higher nominal bar. and that

benoit cœure : reviving credit growth in the euro area speech by mr benoit cœure, member of the executive board of the european central bank, at the paris europlace international financial forum “ growth and investment opportunities in europe ”, paris, 11 july 2013. * * * i wish to thank jean - francois jamet for his contributions to this speech. i remain solely responsible for the opinions contained herein. ladies and gentlemen, i would like first to thank paris europlace for inviting me to speak today. every year, this conference offers the opportunity to take a closer look at the challenges for the european financial sector that have been thrown up by the crisis. they come under three headings : deleveraging, fragmentation, recession. and all three are interrelated. as banks, households and governments deleverage, some economies in the euro area are being affected more than others. financial conditions across the monetary union have diverged significantly, and resulted in large cross - country dispersion in loan dynamics. financial fragmentation, uncertainty and a subdued macro environment have also manifested themselves in a contraction of investment, which is currently the most important drag on growth in the euro area. in the first quarter of 2013, investment in the euro area was 22 % below its pre - crisis level in 2007 q2. this year, the european commission expects investment to further contract by 2. 6 %, or 0. 5 % of euro area gdp. so, if the principal answer to the crisis is a return to growth, a core concern has to be how to revive credit provision in all parts of the euro area. i will today discuss in turn the role of three key factors in that respect : monetary policy, banking union and financial market structure. the role of monetary policy let me start with the role of monetary policy. throughout the crisis, the ecb has played an important role to ensure, within its price stability mandate, the proper financing of the euro area economy in a context of subdued credit dynamics. first, we have reduced our main interest rates to historic lows. we have narrowed the interest rate corridor to 50 basis points which helps reduce fragmentation between banks that rely on ecb liquidity and those that can borrow in the interbank market. and last week, unanimously, the governing council took the important step to introduce forward guidance within our two pillar monetary strategy. we expect the key interest rates to remain at present or lower levels for an extended period of time. consistently