benoit cœure : exchange of views with members of the french parliament introductory remarks by mr benoit cœure, member of the executive board of the european central bank, prior to an informal exchange of views with the finance committee of the national assembly, paris, 15 may 2019. * * * mr chairman, ladies and gentlemen of the national assembly, thank you for inviting me here today. it is a pleasure to engage in an informal exchange of views with you today on the ecb ’ s monetary policy, and on policies to raise the economic potential of the euro area. allow me to start by briefly discussing the economic situation of the euro area. the euro area economic outlook in 2018 the euro area economy grew by 1. 9 %, compared with 2. 4 % in the previous year. this moderation in economic growth was mainly due to weaker global trade, as well as some temporary factors at both the domestic and global levels. while there are signs that some of the idiosyncratic domestic factors dampening growth are fading, global headwinds continue to weigh on euro area growth developments. moreover, the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets is leaving marks on economic sentiment. as a result, the slower growth momentum has extended into the current year. at the same time, the euro area economy continues to exhibit a high level of capacity utilisation, and the unemployment rate has continued its downward trend. in march it stood at 7. 7 %, its lowest level since september 2008. employment gains and rising wages continue to underpin the resilience of the domestic economy. looking ahead, the latest ecb staff projections from march 2019 put euro area annual real gdp growth at 1. 1 % in 2019, 1. 6 % in 2020 and 1. 5 % in 2021. at the same time, the persistence of uncertainties, mainly stemming from the global environment, continues to pose downside risks to the growth outlook. looking at inflation developments, euro area annual hicp inflation was 1. 7 % in april 2019. while measures of underlying inflation remain generally muted, the ongoing economic expansion, with tightening labour markets and rising wages, will support the further build - up of price pressures. the latest ecb staff projections foresee annual euro area headline inflation of 1. 2 % in 2019, 1. 5 % in 2020 and 1. 6 % in 2021. the ecb ’ s monetary policy

the ecb is, and will remain, to maintain price stability in the euro area. this objective will not change with the ecb ’ s new responsibility for banking supervision in europe. however, bearing in mind the role of financial markets for the transmission of monetary policy and the importance of well - integrated financial markets in a monetary union, measures to ensure a stable and well - ordered financial system in the euro area will be beneficial for the conduct and smooth transmission of monetary policy. bis central bankers ’ speeches the banking union can therefore support our single currency and can relieve monetary policy of some of the tasks undertaken during this crisis – notably, the task to repair or, in some cases, to bypass a clogged transmission channel. the non - standard measures may then be gradually phased out, as the changes introduced in the monetary policy framework during the crisis will no longer be necessary. this should not be confused with a change in course from the accommodative monetary policy. a phasing - out of certain emergency measures is desirable, given that new market distortions might otherwise emerge. financial fragmentation affects monetary policy the years preceding the financial crisis were very favourable as regards the integration of capital markets in europe, with the integration of euro area money markets forming a key pre - condition for the proper conduct of monetary policy. our policy rate instantaneously transmits to the interbank money market rates and determines the refinancing conditions of the banking sector. in this regard, the money market further transmits monetary policy impulses to other markets and financing conditions and is key to the homogenous transmission of monetary policy across the euro area. moreover, the integration of securities and wholesale markets plays an important role for the funding of the banking sector. with the banking sector in the euro area being an essential source of financing of the real economy, the integration of these markets plays an important role in the pass - through of monetary policy decisions to the lending rates of the banking sector. the financial crisis has challenged the stability and integration of european financial markets in an unprecedented way. it has thrown into reverse the steady integration seen since the inception of the euro. the causes for this were manifold. first, heterogeneous economic developments caused by financial and structural imbalances across euro area member states led to outflows of funds from the countries that were perceived as more risky – in view of their large cumulated imbalances stemming from ample competitiveness gaps, high current account deficits and high private