mario draghi : introductory remarks representatives of the netherlands at the house of introductory remarks by mr mario draghi, president of the european central bank, at the tweede kamer der staten - generaal ( house of representatives of the netherlands ), the hague, 10 may 2017. * * * mr chairman, honourable members of parliament, this year, we celebrate the 60th and 25th anniversaries of the treaties of rome and maastricht. despite the many challenges that we face as europeans, we should never forget the significant achievements of european integration in providing peace, security and prosperity. the fact that the treaty that gave birth to the euro was signed in this country symbolises the enduring role of the netherlands at the forefront of this european project. i am therefore honoured to be invited to speak here at the dutch parliament. today ’ s event offers an opportunity to provide insight into the ecb ’ s decisions and to listen to your views. it is indeed important for the ecb to reach out to euro area citizens and their representatives to explain how we fulfil our mandate. the eu treaties democratically conferred upon the ecb the primary objective of maintaining price stability in the euro area as a whole. this objective binds my colleagues and me on the ecb ’ s governing council, where our decisions are the result of collegial debate. and we are held accountable for our decisions by all eu citizens through their representatives in the european parliament. in my remarks today, i would like to expand on three points. first, i want to show how a very severe double dip crisis required the ecb to deploy unconventional instruments to ensure price stability. and our measures are proving effective : incoming data confirm that the cyclical recovery of the euro area economy is becoming increasingly solid and that downside risks have further diminished. second, i will discuss the possible side effects of these measures. i will consider the different dimensions in which our monetary policy affects people ’ s finances and welfare, which are sometimes overlooked in the current debate. finally, i will outline why the ecb cannot be the only actor contributing to the recovery. other economic, financial and fiscal policies are essential to ensure a sustained recovery. recovering from the crisis : the role of monetary policy let me start by recalling where we came from. the great recession, as it is called, resulted in a protracted period of low inflation and low growth. specifically, the euro area faced two interlinked and successive crises – a financial crisis in 2008

as workers, entrepreneurs, investors, borrowers and taxpayers. similarly, there are several channels through which our policies affect pension systems. yes, lower rates increase the present value of future liabilities of pension schemes. however, the liability side of pension schemes is only one part of the equation. what happens on the asset side is also important. and our monetary policy has had a beneficial impact on this side of the equation as the value of the investment portfolio has increased. also, let ’ s not forget that our monetary policy supports pension systems indirectly by supporting employment growth and thus pension contributions. in any case, it is ultimately up to sound governance structures and longterm strategies to ensure the financial health of pension systems. equally, monetary policy can have an impact on bank profitability through various channels. our assessment is that so far these effects tend to largely offset each other in aggregate terms. low rates might reduce bank profits through the narrowing of net interest margins. yet, at the same time, by supporting the recovery, accommodative monetary policy reduces delinquencies and defaults, including on mortgages. improved credit quality coupled with higher lending volumes and an improved market value of assets supports bank profitability. of course, depending on the strength of their balance sheet, some banks may be more affected than others. also banks facing structurally high cost - to - income ratios or limited diversification of income sources might have to revamp their business models regardless of the low interest rate environment. finally, let me also address the risks of overheating in some parts of the financial markets. we do not currently see compelling evidence of overstretched asset valuations at the euro area level, but we do see that real estate dynamics or high household debt levels in some countries signal the risk of increasing imbalances. such risks also exist in the netherlands : they relate to the continued very high level of household indebtedness and the low level of mortgage collateralisation. for this reason, we share the concerns expressed in the warning issued by the european systemic risk board in november 2016 and recognise that there is a case for mitigating measures. that being said, monetary policy is not the appropriate tool for addressing local and sectoral financial risks. rather, targeted macroprudential policies, which can be tailored to local and sectoral conditions, are the right answer. 1 the way forward against the backdrop of a recovery that is becoming increasingly solid, the benefits of our policy clearly outweigh