luis de guindos : the euro area economy and our monetary policy stance remarks by mr luis de guindos, vice - president of the european central bank, at asociacion para el progreso de la direccion ( apd ), madrid, 18 march 2019. * * * recent economic developments in recent months, incoming euro area data have continued to be weak and the economy has grown below expectations. that is, euro area real gdp increased by 0. 2 % quarter - on - quarter in the fourth quarter of 2018 ( according to preliminary estimates ), which was slightly up from 0. 1 % in the quarter before, but well below the 0. 4 % growth observed in the first half of 2018. the continued weakness, particularly in the manufacturing sector, reflects the slowdown in external demand, compounded by some country and sector - specific factors. the global economy is expanding at a more modest pace. according to imf estimates, global growth has moderated to 3. 7 % in 2018 ( from 3. 8 % in the previous year ), and is expected to slow to 3. 5 % in 2019. important euro area trading partners, such as china, show signs of a maturing economic cycle, and this has affected euro area exports. net exports recovered in the fourth quarter of 2018 ( according to preliminary estimates ), but weaker exports were the main factor behind the steep growth slowdown observed in the third quarter. in the euro area, the slowdown in growth has been particularly visible in the manufacturing sector. euro area industrial production, excluding construction, declined by 1. 4 % quarter - onquarter in the fourth quarter of 2018, with the slowdown being widespread across sectors and most major economies. purchasing managers ’ survey data on manufacturing production also moved into contractionary territory last month. growth in services, in contrast, proved to be more resilient. country and sector - specific factors have been playing a role as well. temporary issues in the automotive sector due to new regulation, for example, caused industrial production to fall particularly strongly in some euro area countries. these idiosyncratic factors are only fading slowly, and have been weighing on growth for longer than anticipated. meanwhile, persistent uncertainties have left their mark on business and consumer confidence. these uncertainties relate to geopolitical factors, such as the state of play of the brexit negotiations, the continued threat of trade protectionism and vulnerabilities in emerging markets.

banks this would be one of the more benign outcomes. and it seems to be happening right now. scenario two : fintechs might break up the value chain of banking. banks would end up losing revenue, market share and direct contact with clients. the result might be a more fragmented market where some players operate outside the scope of regulation and supervision. scenario three : banks might still end up being crowded out. at the same time, however, the fintechs could be swallowed up by big tech companies, such as google, amazon and facebook. the market would become more concentrated, less competitive and less diversified. whichever direction we are headed, there is one thing we supervisors worry about : increasing or unidentified risk. and there are indeed some risks that have become more apparent now that fintechs have entered the scene. a basic truth is that new players make the market more competitive. and that could squeeze profits and force banks to cut costs in areas such as risk management. this is a general concern we have. at the same time, bank funding might become less stable. new products, tools and services 1 / 3 bis central bankers'speeches enable depositors to easily and quickly switch banks ; they can select a better offer in a heartbeat. for banks, deposits might become a less reliable and more costly source of funding. with regard to lending, we are also seeing new trends such as peer - to - peer lending and crowdfunding. here, savers and borrowers interact directly – banks no longer serve as middlemen. as these new businesses grow, risks associated with traditional banking might emerge – just think of the risks from maturity and liquidity transformation. some peer - to - peer lenders are already securitising the loans they originate from their platforms. regulators will need to deal with the resulting vulnerabilities. the work on shadow banking done by the financial stability board and the basel committee on banking supervision might serve as a basis. some fintechs also apply new models for scoring the quality of loans. these models are based on vast amounts of data and are supposed to be more precise than traditional approaches. but they have hardly ever been tested in a severe recession or a crisis. so we don ’ t know how well they would work in such situations. in respect of asset management, new products such as robo - advice are now appearing. these are computer programmes that advise customers on how to invest their money. depending on their design, they might lead many investors to