peter praet : the interaction between monetary policy and macroprudential policy speech by mr peter praet, member of the executive board of the european central bank, at the money, macro and finance research group conference on the resilience of the global financial architecture, london, 27 september 2018. * * * i would like to thank john hutchinson for his support in the preparation of this speech. introduction a decade on from the start of the global financial crisis, which led to the biggest drop in economic activity in euro area economies since the second world war, the euro area is currently experiencing a broad - based expansion. looking ahead, significant monetary policy stimulus is still needed to support the gradual build - up of price pressures for the sustainable return of inflation to levels below, but close to, 2 %. at this stage of the recovery, the main risk to price stability would be a significant slowdown in growth that could originate from rising protectionism, vulnerabilities in emerging markets and a global repricing of risk. the crisis has brought about a major overhaul of the regulatory, supervisory and macroprudential frameworks in europe. while this is expected to reduce the likelihood of systemic financial vulnerabilities taking root and morphing into a crisis, we should acknowledge that we are still in a transition phase. some major elements of the new frameworks still have to be implemented or finalised, and legacies from the previous crisis are still present. furthermore, some areas of the financial system are still not yet adequately covered by regulation, for example leverage in the non - bank financial sector. in my remarks today, i would like to elaborate on the interaction between monetary policy and macroprudential policy. i will first review the conceptual framework for monetary policy and financial stability and then look at how, at this stage of the cycle, macroprudential policy and monetary policy can best complement each other in the pursuit of their respective objectives. monetary policy and financial stability price stability and financial stability are tightly interconnected and mutually reinforcing ; in the longer - term, each is a necessary – but not sufficient – condition for the other. price stability contributes to the efficient allocation of resources in the real economy, thereby supporting longterm growth. a stronger and more stable macroeconomic environment contributes to healthy household and business balance sheets, thereby fostering financial stability. however, history abounds with cases where financial vulnerabilities were built up in good times, while

. sepa for cards – business rules the business rules are set out in the sepa cards framework ( scf ) by the european payments council ( epc ), as well as the ecb ’ s “ sepa for cards ” report of november 2006. of course, every agreement is to some extent a compromise which tries to accommodate as many views as possible. that is not to say that there is anything wrong with a compromise per se. without the ability to reach compromises we would, for example never have been able to agree on the design of the euro banknotes since, of course, every country believed its legacy banknotes to be the most beautiful. however, a compromise should not be too general leaving too much room for interpretation. i have already said on several occasions before that for me the scf document is perhaps too general. i think the scf requires further development, increased clarity and more detailed rules. let me also recall that in the sixth sepa progress report we proposed the creation of a card transaction processing framework. 1 this would set out the business rules for card schemes and processors with regard to the processing of sepa card transactions. but european projects and initiatives do not relieve individual stakeholders of the responsibility to contribute to european integration. major efforts by individual card scheme providers are needed too. although work has already started in some areas, it is far from finished. a number of tasks that i have highlighted on other occasions before are still outstanding : the effective separation of scheme management from processing entities in order to overcome barriers to entry and to contribute to fairer and greater competition between card schemes, as well as between processors ; the charges or reporting requirements that some schemes impose on issuers and acquirers for transactions carried out with cards bearing their brand, even if it was not used in the transactions ; the setting of the brand that will be used at terminals, without giving the retailer and / or cardholder any choice ; and the rule that in cross - border transactions, it is always the interchange fee of the country of the merchant that applies. europe is not the only region to recognise the importance of clear business rules for the proper functioning of the cards market. less than a month ago the canadian government released a code of conduct for the credit and debit card industry in canada, which promotes fair business practices and ensures that merchants and consumers understand the costs and benefits associated with credit and debit cards. this follows similar regulatory initiatives in the united states and significant efforts made in australia,