yves mersch : remarks at the " challenges in understanding the monetary transmission mechanism " conference remarks by mr yves mersch, member of the executive board of the european central bank, at the " challenges in understanding the monetary transmission mechanism " conference, warsaw, 22 march 2019. * * * should we radically rethink the role of cash to deal with the lower bound on interest rates? the lower bound on interest rates has been a major challenge for central bankers in the multiple crises over the last ten years. it threatens the effectiveness of monetary policy by preventing it from steering financial conditions. moreover, the continuous decline in both the real rate and confidence in the central bank, as well as resistance at the retail level, raises the question of whether negative rates should be part of the standard toolkit of central banks. in the context of the eurosystem ’ s asset purchase programmes, the combined package of negative nominal interest rates and lending schemes that incentivise banks to increase lending ( e. g. the targeted longer - term refinancing operations, or tltros ) have been an effective and appropriate way to combat these challenges. while cash represented the largest part of central bank balance sheets before the crisis, other elements of the balance sheet have since gained more prominence in the operational framework of monetary policy. some people want to abolish cash by taking advantage of recent technological advances, such as distributed ledger technology ( dlt ), or replace public money with private money, in total denial of people ’ s trust in liabilities issued by central banks and the fact that their continued demand for cash exceeds gdp growth. others argue for the introduction of a dual currency scheme where the central bank would divide the monetary base into two separate local currencies – cash and electronic money ( e - money ). e - money would be issued only electronically and would pay the policy rate of interest, and cash would have an exchange rate – the conversion rate – against e - money, which could be manipulated to match negative rates on emoney by setting the conversion rate for cash lower than one to one. 1 i have experienced the nightmare of dual exchange regimes before the euro and i have doubts about these arguments. our unconventional measures have proven sufficient to meet the challenges of low inflation. the governing council has confidence in the sustained adjustment in the path of inflation. recent evidence supports the hypothesis that there is some substitutability between conventional and unconventional monetary policies. 2 additionally, while being able to set significantly negative

joachim nagel : too low, too high - what's next for inflation? speech ( virtual ) by dr joachim nagel, president of the deutsche bundesbank, at the j oint spring conference 2024 " structural changes and the implications for inflation ", eltville am rhein, 7 may 2024. * * * check against delivery 1 introduction ladies and gentlemen, i am delighted to welcome you to the conference today. i truly regret that i cannot be there in person to speak to you at the conference dinner that awaits you shortly. six weeks ago, harvard economist stefanie stantcheva kicked off a conference by asking : why do we dislike inflation? 1 she presented new survey - based evidence, corroborating previous findings that inflation attracts a high degree of attention among the public. its largest impact on the lives of the survey participants has been the increased cost of living in general. in second and third place, they answered that it is harder to afford food and gas. i see stantcheva's findings as additional motivation to continue working on a timely return of inflation in the euro area to our target level of 2 % in the medium term. yet, once the high inflation phase in the euro area is over, will we see weak inflation rates like we did before the pandemic? or will structural forces put upward pressure on inflation rates in the years to come? 2 starting point : pre - pandemic inflation inflation in the euro area was persistently too low in the period between 2013 and 2019. as measured by the hicp, the average inflation rate in this period amounted to 1 %, which was clearly below the eurosystem's aim. at the beginning of this too - low inflation period, some economists called this phenomenon a missing inflation " puzzle. 2 according to empirical research, this weakness resulted from a combination of cyclical and structural factors. 3 with respect to the cyclical factors, the financial crisis and, later on, the sovereign debt crisis caused recessions in the euro area in 2009 and 2012. however, structural factors may well have played a role, too : globalisation, digitalisation and demographic change. globalisation is – or maybe was – accompanied by higher global value chain participation and increasing financial openness. it might therefore have lowered inflation by reducing costs and diminishing the bargaining power of employees as well as firms'market power. 1 / 4 bis - central bankers'speeches in the context of digitalisation