klaas knot : monetary - fiscal policy mix in the euro area - lessons learnt and the way forward introductory remarks by mr klaas knot, president of the netherlands bank, at the european central bank policy panel at the annual congress of the european economic association, rotterdam, 27 august 2024. * * * thank you very much for inviting me. this panel touches upon a topic that i believe will always lie at the forefront of policy discussions, especially in the light of our experiences from the recent past. i will start my remarks by recalling the policy responses to the global financial crisis and the covid pandemic. because i think these events have taught us important lessons not only about the appropriate monetary / fiscal policy mix, but also about the fiscal policy design both at the national and at the union level. when the euro was introduced, the common belief was that national fiscal policy should focus on stabilising national business cycles and that monetary policy was the appropriate instrument for stabilisation at the euro area level. this thinking changed when interest rates fell for an extended period and were approaching their effective lower bound, thereby limiting the effectiveness of monetary policy. this increased the importance of fiscal coordination among member states. this came to the fore for the first time during the global financial crisis. during the global financial crisis and the subsequent debt crisis in the euro area. the monetary / fiscal policy mix was suboptimal, both at the national and the european level. monetary policy was quite accommodative throughout that period, there is little doubt about that. its intended stimulus could have been reinforced by a countercyclical fiscal stance. that would potentially have allowed a faster economic recovery without having to rely so excessively on loose monetary policy. however, this is not what happened. throughout most of the debt crisis, most governments pursued tight fiscal policies. this reflected choices that are understandable at the national level, as some countries had little choice but to undergo fiscal consolidation, but it was not conducive to economic recovery at the european level. had monetary and fiscal policy moved in tandem, the recovery could have been quicker. but this would only have been possible if public finances had been on a sound footing throughout the euro area. unsustainable debt levels and fiscal deficits spinning out of control make it difficult to implement the right monetary / fiscal policy mix. the monetary / fiscal policy mix was more effective during the pandemic. again, the ecb conducted a very acc

500, 000 hours of queuing up to pay will be saved. bis central bankers ’ speeches with this enormous advantage, most payment terminals ought to be adapted to contactless payment within the next couple of years. contactless payment is already a success in other countries and may really take off in europe. also prompted by the societal and political call to up the speed of payment transfers, and create the possibility to make payments at all days and hours of the year, the forum is working together with the covenant parties on a plan to be presented at its autumn meeting on 21 november 2014. i ’ m already looking forward to it, as this plan may even spark real - time payment transfers. this will in fact also demand comprehensive renewal of the payments infrastructure, which will have to be paid for. in fact, the call for faster payments transfers has already led to tangible improvements in sweden, denmark, the uk, and australia. so payments transfers are on the brink of numerous innovations. the agreement that was just signed is an excellent response to this and is decidedly forwardlooking. on the road to state - of - the art european payments. i call on all parties to include the agreement in the erpb debates to work on new european payments products. dnb will also do this, of course. this requires from all representative organisations, and in fact from us all, the willingness to take a more european perspective, and work closely together at a european level. we will now bring the national representative organisations and the european ones closer together. i look forward to a near future, in which european retailers, businesses and consumers will be even more able to reap the benefits of a safe, robust, socially efficient and innovative payments system. this is in fact also one of the stated objectives of the economic and monetary union. i sincerely congratulate the signatories, and with them essentially all retailers, consumers and banks, on the start of the innovative european payments era. thank you for your attention. bis central bankers ’ speeches