peter praet : interview in neue zurcher zeitung interview with mr peter praet, member of the executive board of the european central bank, in neue zurcher zeitung, conducted by by ms claudia aebersold szalay and mr peter a fischer and published on 19 september 2015. * * * mr praet, you have been chief economist of the ecb for the past four years now. during this period, the policy of the ecb has changed somewhat. does it make a difference who the chief economist of the ecb is? both the president and the chief economist have changed, but what has changed most of all during this period is the economic environment in which we find ourselves. at the onset of the crisis in 2007, we still thought we were simply dealing with an external liquidity shock. so, the central banks across the globe reacted accordingly, and at the time the ecb also focused on providing liquidity to banks. i can still remember the headlines back then, saying that the ecb was providing €100 billion in liquidity, which seemed an incredible sum at the time. the crisis nonetheless escalated. yes, it quickly turned into a credit crunch, which in 2012 escalated into a euro crisis. however, to come back to your first question : the circumstances have changed dramatically ; the identity of the chief economist plays a minor role in that sense. ecb decisions are not a “ one - man show ”, but rather the result of discussions amongst the members of the governing council. that is an open, professional and collegial exchange, and this is the basis on which the ecb ’ s governing council makes its decisions. you give the impression, however, that you take a more anglo - saxon approach, whereas your two predecessors, issing and stark, were rather more of the tradition of the deutsche bundesbank and were, therefore, more stability - oriented in their thinking. i would firmly disagree. i and the entire executive board of the ecb have utterly committed ourselves to price stability. that is our mandate, the task enshrined in the european treaties. we see price stability as symmetrical ; it works in both directions. we fight inflation – when prices rise too quickly – with the same determination as when prices rise too slowly. and with our policy we have certainly been successful in terms of counteracting fears of deflation, i should like to think. all of our policies, including the less conventional ones, are

with a standard fluctuation band of ±15 % around their central rates against the euro, while estonia and lithuania kept their currency boards as a unilateral commitment. in order to ensure a smooth participation in erm ii, countries have firmly committed to take the necessary measures to preserve macroeconomic and exchange rate stability. participation in erm ii has been smooth. the four currencies in the erm ii have traded continuously at or close to their central rates, while short - term interest rate differentials vis - a - vis the euro area have been small. beyond erm ii membership lies the adoption of the euro, the crowning achievement of the monetary integration process. in order to adopt the euro, non - participating eu member states have to achieve a high degree of sustainable economic and legal convergence. every country will be assessed on its own merits and its own particular situation, on the basis of a strict analysis of the performance relating to the maastricht convergence criteria. let me stress that there is no pre - set timetable for the enlargement of the euro area. economic challenges for the new member states how far are the new member states on this road towards the euro? the countries that joined the eu this year have shown impressive economic growth rates and have made great strides in reducing inflation. they belong to the most dynamic economies in the eu, having gone through profound structural changes. for example, they have taken thorough measures to reform their product and labour markets, and some new member states, in some respects, may be even more advanced than other, existing eu countries. they have become more integrated with the euro area, with the major part of their trade now occurring with the euro area and tight financial links : as a matter of fact, the share of the new 10 member states in the total external trade of the euro area stands around 11 %, compared with around 14 % for the us and 3 % for japan. in addition, the transition process has brought their economic structures closer to those of the euro area. at the same time, while remaining a diverse group in many respects, the new member states still display distinct economic characteristics that differ from the euro area. their income - per - capita and productivity levels are still low relative to the euro area, which may have an impact on their inflation rates. let me mention two particularly important economic challenges that the new member states are confronted with on the road to the euro : price stability and fiscal policy. price stability is an essential