pablo hernandez de cos : navigating through a storm - policy challenges in the current macro - economic environment introductory address ( via video ) by mr pablo hernandez de cos, governor of the bank of spain, at the pannel " navigating through a storm - policy challenges in the current macro - economic environment ", during the sixth european systemic risk board annual conference " addressing financial stability challenges ", frankfurt am main, 8 december 2022. * * * good afternoon everybody and welcome to this first discussion panel of the sixth annual conference of the european systemic risk board. in this roundtable, we will be discussing and sharing views on identified challenges affecting the conduct of policies in the current turbulent times, which are having important repercussions for the economic and financial environment. as noted by president lagarde, during her welcome address, in the course of this year we have witnessed an increase in financial stability risks. the appalling invasion of ukraine by russia, initiated as we were recovering the activity levels previous to the pandemic, has contributed to either fuel new or exacerbate existing systemic vulnerabilities in europe and beyond. spikes in energy and food prices, continued disruption of global supply chains and demand pressures have resulted in higher and more persistent inflation across the board. this has triggered a response of monetary policy, which is now normalising around the world, contributing to tighter global financial conditions and increased volatility and liquidity tensions. and it is the combination of the uncertainty derived from the war ( and more in general from geopolitical tensions ) with the increase of inflation and the rising interest rates that has generated, ultimately, a general deterioration of the economic outlook with, for example, one - year ahead recession probabilities having increased markedly, in both the euro area and other major advanced economies. this challenging financial stability outlook is well laid out in the warning on vulnerabilities in the eu financial system that the european systemic risk board issued last september. indeed, the esrb has alerted of the heightened uncertainty and the increased probability of tail - risk scenarios materialising. in particular, the esrb has warned of three severe systemic risks : 1 / 3 bis - central bankers'speeches ( i ) first, the deterioration in the macroeconomic outlook combined with the tightening of financing conditions, leading to negative consequences in terms of balance sheet stress for non - financial corporations and households, especially in sectors and member states that are most affected by rapidly increasing energy prices

mario centeno : policy mix of the future - the role of monetary, fiscal and macroprudential policies keynote intervention by mr mario centeno, governor of the banco de portugal, at the international conference " future of central banking " organised by the bank of lithuania and the bank for international settlements on the occasion of the centenary of the bank of lithuania, vilnius, 29 september 2022. * * * good morning. let me start by explaining why i consider that the coordination between monetary and fiscal policy is fundamental for the european union to overtake the challenges of the current uncertain economic context. afterwards, i will also address the role of macroprudencial policy. monetary policy gathered credibility over the past 40 years centred on the independence of central banks and on a strong commitment to price stability. the monetary dominance paradigm is a cornerstone of the institutional framework that supports this credibility. and it plays an important role in the current high inflation setting. monetary policy must act to ensure that inflation expectations remain anchored, whereas fiscal policy must be bound to public debt sustainability. however, as claimed by central bankers over the last decades, the recent pandemic experience has shown how monetary and fiscal policies can coordinate in many circumstances, and mutually reinforce each other. notice that the low inflation, low interest rate environment that prevailed for over a decade, favoured strategic complementarities between monetary and fiscal policy towards macroeconomic stabilisation. in that environment, fiscal policy faced a less steep trade - off between public debt sustainability and stimulating demand. however, the pandemic legacy adds importance to debt sustainability. at the end of 2021, the euro area debt ratio was still 12 pp above the 2019 level. currently, as we move away from the zero - interest rate environment, rising debt servicing costs are becoming again a concern, in particular for high - debt countries. in the high inflation scenario, the trade - off between debt sustainability and macroeconomic stabilisation is stronger, especially as inflation outcomes are mainly driven by supply factors. monetary policy is more effective when inflation is demand driven ; fiscal policy has the tools to address specific supply shocks as we face today. monetary policy also faces a challenging choice between a more gradual increase of the policy rate, which takes into account the high uncertainty and its effects on the real economy, and a stronger response that tames the risks of inflation remaining noticeably above the objective for a protracted period. 1 / 4 bis - central bankers'speeches a faster than warranted increase in policy rates may