came at the cost of price stability. 4 bring a timely end to ultra - accommodative monetary policy and that brings me to monetary policy and my third thesis : ultra - accommodative monetary policy cannot resolve the deeper - seated problems weighing on europe and needs to be stopped as soon the objective of price stability permits – even if the higher interest rates cause the sustainability of public finances in individual countries to go downhill or trigger price volatility in financial markets. the aim of monetary policy is well known : to maintain price stability. the maastricht treaty mandates this as the eurosystem ’ s primary objective. however, the treaty is silent on the issue of what exactly is meant by price stability. that ’ s why the ecb governing council issued its own definition : to keep the inflation rate in the euro area at a level below, but close to, 2 % over the medium term. while this target rate may seem somewhat arbitrary to you, there are thoroughly reasonable grounds for promoting moderate inflation and avoiding zero inflation. hans - werner sinn once colourfully described it in the following words : " inflation is an economic lubricant. too much oil in the engine soots up the spark plugs ; not enough causes piston seizure. " excessively high inflation comes at a high economic – not to mention social – cost, which is why the oil should be used sparingly. on the flip side, however, the oil cannot be allowed to run out. targeting zero inflation is not a viable option, however tempting it may sound to consumers. that ’ s because an inflation rate of zero would mean that individual industries or entire economies that need to claw back a loss of competitiveness would face the daunting prospect of having to push through nominal, rather than merely real, wage cuts. that ’ s a tall order, though, because people tend to think more in nominal terms than in real dimensions. but there ’ s something else besides that : if monetary policymakers strive for slightly positive inflation rates, the overall interest rate level will be somewhat higher, creating a certain safety margin to the lower bound on interest rates. as we now know, this bound is not exactly at zero, nor is it significantly below that level. if the inflation target is too low, a central bank ’ s scope for stimulating the economy by means of its interest rate policy may be exhausted too quickly. headlines reading “ inflation is back ” have spiked in recent weeks, and inflation rates

, the growth of the digital economy, whose output is usually immaterial, limits the role of gdp in measuring economic activity and wellbeing. digitalization has dramatically changed how businesses are conducted and goods and services purchased. this brings us to the productivity paradox : productivity in industrialized countries is growing less than in past decades while economies are experiencing rapid digitalization. jerome powell noted that current statistics may understate productivity growth because they miss the value that we increasingly derive from new technologies, such as internet connections and smartphones. the measurement of the digital economy is now an important challenge for statisticians and economists. we need new methodological insights. to answer some of these questions, in 2016 banca d ’ italia put together a team to assess the potential benefits and hidden risks of big data, artificial intelligence and machine learning. despite controversies about privacy issues, despite password hacking and other worrisome aspects of online life, the world continues to embrace the internet and social media. it is estimated that more than 5. 1 billion people ( two thirds of the world ’ s population ) use a mobile phone and 4. 4 billion people take advantage of internet services. in 2018 the number of internet users recorded 9 per cent growth ( see the we are social blog ). so we have plenty of new data which can be mined to improve our knowledge of economic developments. to understand and exploit these data we need to bring together different skillsets : those of economists, statisticians, engineers and computer scientists. what are the advantages of these data? in his lecture on ‘ big data and measurement : from inflation to discrimination ’, the mit professor roberto rigobon said that the biggest advantages of organic data ( i. e. big data ) as against designed data ( such as administrative data ) are that : ( i ) they reduce the cost of collecting and providing information and ( ii ) they do not introduce distortions arising from the behaviour of respondents. people don ’ t lie to their gps or to google. the banking and financial industries have also been profoundly affected by these developments. central banks must react in a timely manner and develop new tools to carry out their missions : monetary policy, banking supervision and payment system oversight. in these two days you have seen many applications which can improve central bank activities. some papers focused on the extraction of quantitative information from texts and images : this can be useful for forecasting financial market variables, predicting headline inflation, and analysing the real estate market. 1