joachim nagel : ensuring the supply of cash – including in times of crisis welcome message by dr joachim nagel, president of the deutsche bundesbank, at the 2023 symposium " ensuring the supply of cash – including in times of crisis ", berlin, 15 june 2023. * * * check against delivery 1 welcome ladies and gentlemen, a very warm welcome to our symposium on ensuring the supply of cash – including in times of crisis. i'm glad you could make it! as the world around us becomes increasingly digital, it's often the case that payment instruments other than cash, like cards, smartphones and online payments, grab all the attention. that's why some regard cash as outdated – just as bicycles were considered old - fashioned when cars and motorcycles became more widespread, or printed books in the era of e - books. but the truth of the matter is that cash continues to be fairly popular here in germany. in terms of transaction numbers, cash remains the most widely used means of payment at the point of sale, as our latest payment behaviour study shows. 2 payment behaviour in germany will things stay that way? that depends on whether the trend decline in cash use will continue and what shape it takes. even before the coronavirus pandemic struck, the share of transactions settled in cash was in slow but steady decline. that downturn then gained traction as the pandemic played out. recent analyses indicate that the trend towards cashless payments will continue, but not at the same pace as during the pandemic. it is interesting to note that although the take - up of cash is shrinking, the volume of cash in circulation has increased by an average of 6 % each year over the past ten years. that's because cash isn't used just for payments. it also serves as a store of value – and increasingly so. this bears testament to the high level of public confidence in the euro itself and in euro cash in particular. but precautionary demand for money is a factor, too. and judging by the nationwide disruptions experienced by certain card terminals in may and june last year, that sense of caution is not entirely without reason. by the way, those disruptions were caused by a software bug. 1 / 3 bis - central bankers'speeches roughly one - quarter of the people affected by these outages had to either pause their purchases or even abandon them altogether because they did not have enough cash with them. most people were able to

when there was no significant up - or downward trend in inflation. figure 1 euro area hicp inflation and its trend percent notes : the trend is estimated by an unobserved components model of hicp inflation and the unemployment rate for the euro area, see bonam et al. ( 2019 ). second, not only has inflation been subject to a downward trend, but also its inertia – or persistence – has increased since the crisis [ figure 2 ]. after having declined gradually between the mid - 1980s and the early 2000s, inflation persistence is now back at its long - term average. figure 2 euro area hicp inflation and its persistence percent notes : inflation persistence is estimated from a time - varying autoregressive model over a 30 - quarter moving window for seasonally adjusted, quarter - on - quarter euro area headline inflation. the graph shows hicp inflation ( in percent ) together with the inflation persistence parameter. the vertical bar shows the start of the gfc. for details, see bonam et al. ( 2019 ). the million dollar question is then what these developments signal for central banks ’ ability to control inflation. let me explain my take on this issue. notwithstanding the ongoing debate on its validity, i still regard the phillips curve as a relevant analytical framework to structure our thinking. according to the standard view, the phillips curve explains the inflation process in terms of three main elements. the first element is expectations of future inflation. expectations can be forward - looking, in which case inflation is self - equilibrating ; or backward - looking, in which case inflation is more persistent. the second element is economic slack, which captures the impact of aggregate demand. while slack has traditionally been measured by an output gap or unemployment gap, recent research suggests that more granular indicators of labor market conditions are needed to better capture phillips curve relationships in the data. 1 the third element is shocks. these shocks can in principle have a positive, negative or ambiguous effect on inflation. if shocks are more permanent, inflation will be more inertial. if we look back at the euro area over the past decade, most of these shocks appear to have been quite persistent and have 1 see e. g. aaronson, s., cajner, t., fallick, b., galbis ‐ reig, f., smith, c. and w. wascher ( 2014 ). labor force participation : recent developments and future prospects, brookings papers on economic