speech by gediminas simkus at the joint webinar “ investment in the baltics : from pandemic to war ” 2022 - 05 - 20 joint bank of lithuania, bank of estonia, bank of latvia, and european investment bank webinar “ investment in the baltics : from pandemic to war ” 20 may 2022 welcome and opening remarks good morning, dear vice president ostros, governor muller, governor kazaks, dear colleagues and webinar viewers, a warm welcome to this joint webinar organised by the bank of lithuania, the bank of estonia, the bank of latvia, and the european investment bank ( eib ). 1 of 1 we are living in extraordinary times : just as the pandemic pressures started to ease, we got hit by another huge shock – the war in ukraine. let me stress that we stand in full solidarity with ukraine. to date lithuania welcomed some 51, 000 ukrainian refugees and is one of the largest donors of bilateral aid to ukraine in percentages of gdp. while we hope for a swift end to this unjustified war, currently the risks that the war in ukraine escalates remain high. we are experiencing an unprecedented degree of uncertainty. this is worrying, as numerous surveys and reports show that uncertainty is the largest barrier for private corporate investment in the baltics. fortunately, policymakers can address this. as we witnessed in the months following the outbreak of the covid - 19 pandemic, high quality and well - targeted public investment in times of high uncertainty enhances output. it also crowds in private investment, rather than crowding it out. the covid - 19 pandemic offered an opportunity for firms to become more digital. demand for electronic services rapidly increased, creating perfect conditions for expansion of electronic payment service providers. growth in electronic payments created value in the lithuanian financial sector. for instance, one of the lithuanian payments start - ups recently attracted an impressive 65 mln us dollar series a funding. the growing fintech sector also contributes towards solving the structural problem of concentration in the lithuanian financial sector. at the same time, business funding through crowdfunding platforms also gained traction. as pointed out in the eib investment survey that will be presented here shortly, total investment in lithuania rose to 5 % above pre - pandemic levels by the end of 2021. a similar pattern was observed in latvia, while in estonia investment in 2021 stood at staggering 30 to 40 % above pre -

gediminas simkus : post - pandemic economic recovery - realities and perspectives speech by mr gediminas simkus, chairman of the board of the bank of lithuania, at the highlevel conference „ post - pandemic economic recovery : realities and perspectives ”, organized by the national bank of moldova, 4 june 2021. * * * check against delivery dear governors, central bankers and colleagues, it is a great honour to address you on this momentous occasion. the national bank of moldova ( nbm ) is currently celebrating its 30th anniversary. over the past three decades, the nbm has achieved a great deal : from banking sector rehabilitation to delivering on price and financial sector stability – and much besides. i wish to highlight, if i may, the word “ maturity ”. the nbm has matured into a central bank with solid capacity and expertise, resilient governance, autonomy, policy credibility and a strong standing within the international central banking community. this maturity is reflected in the topic chosen for our first session today – the role of central banks in the post - pandemic recovery. this is a topic of strategic importance and long time horizon. it is only fitting that we are having this discussion on such a notable occasion. my brief intervention today will focus on two groups : first, advanced economy central banks, and second, central banks in the emerging markets. let me begin with the advanced world. a strong fiscal impulse, alongside a highly successful vaccination campaign, will put the us economy above its potential already this year. the euro area will continue to operate with a negative output gap. by 2022, it is very likely that the us will have caught up with its pre - pandemic growth trend. there is little chance of that happening in the euro area in the foreseeable future. a heated debate is taking place on the possibility of the us experiencing a surge of inflation. such an eventuality would not allow for synchronised tightening across the advanced economies. managing such desynchronisation may prove to be challenging. at the same time, we should not rush to conclusions. the environment in which monetary policy operates has changed in recent years. the natural real rate of interest has declined to 0 % or even lower over the past two decades in both the us and europe. phillips curves have become considerably flatter in this period. several structural factors underlie this diminished relation between inflation and economic activity. the first is globalisation, which