lorenzo bini smaghi : western democracy and its discontents – economic and political challenges speech by mr lorenzo bini smaghi, member of the executive board of the european central bank, at the aspen transatlantic dialogue : “ western democracies under pressure ”, rome, 14 october 2010. * * * the theme of this conference, especially this first session, which concerns the ability of democratic systems to cope with the challenges of economic and financial crisis, has been addressed in the past by distinguished scholars such as ralf dahrendorf. he observed that : “ to stay competitive in a growing world economy [ the oecd countries ] are obliged to adopt measures which may inflict irreparable damage on the cohesion of the respective civil societies. if they are unprepared to take these measures, they must recur to restrictions of civil liberties and of political participation bearing all the hallmarks of a new authoritarianism... the task for the first world in the next decade is to square the circle between growth, social cohesion and political freedom. ” 1 this comment was written in the mid - 1990s, but the current crisis makes it even more pertinent. it ’ s an expression of doubt about the ability of ( so - called ) advanced countries to be able to take unpopular but necessary measures to overcome the crisis that is prompting financial markets to disinvest, or even bet on those countries ’ bankruptcy, resulting in an outflow of capital that prolongs the crisis. what lessons can we draw from this crisis in respect of the functioning of democratic systems, and in particular their ability to meet the challenges of the global economy? let me try to provide some answers, starting with three thoughts on the current crisis. the first one concerns the causes of the crisis. reams of commentary have been produced on the factors that unleashed it. some commentators have focused on the shortcomings of the financial regulations, or on the ineffective supervision of markets and market participants. others have pointed to the excessive monetary expansion in some countries. others still have remarked that the lack of international coordination has generated large global imbalances. there is a grain of truth in each of these analyses. but if we stay at this level of detail we risk missing the essence of the problem and not finding a remedy for it. we have to ask why the regulations were inadequate, why monetary policies were so loose, why international cooperation was insufficient. were they simple human errors, or

luis de guindos : the euro area - current status and the monetary policy stance remarks by mr luis de guindos, vice - president of the european central bank, at deusto business school, madrid, 11 february 2019. * * * recent economic developments euro area data have been weaker than expected in recent months. in fact, industrial production growth fell in the second half of 2018 and the decline was widespread across sectors and most major economies. business investment weakened. on the external side, euro area trade disappointed, with noticeable declines in net exports. as a result, economic growth turned out to be weaker than expected : euro area real gdp increased by 0. 2 % quarter - on - quarter in the last two quarters of 2018, down from 0. 4 % in the first two quarters ( on the basis of preliminary figures ). factors of idiosyncratic nature have been pulling growth down as well. these relate to temporary issues in the automotive sector due to new regulation, street protests and weather conditions. while there is uncertainty about the magnitude and persistence of these factors, near - term growth in the euro area is likely to be weaker than previously anticipated. turning to the global environment, global growth is showing signs of a maturing economic cycle. global activity is still expanding, but growth in important euro area trading partners, such as china, has been moderating. this has been feeding through to lower euro area exports. indeed, a large part of the growth slowdown in the third quarter of 2018 came from a weaker contribution from net exports. moreover, geopolitical uncertainties, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility have proven to be more persistent than initially foreseen. in europe in particular, the state of play of the brexit negotiations is adding to the uncertainty. all these elements have increasingly weighed on economic sentiment and are now reflected in moderating business and consumer confidence. headline inflation figures have also been declining : hicp inflation decreased to 1. 4 % in january, from 1. 6 % in december, mainly due to falling energy prices. looking ahead, headline inflation is likely to decline further over the coming months on the basis of the financial market ’ s outlook for oil prices. sound factors of resilience are however in place. the euro area expansion is expected to continue, supported in particular by favourable financing conditions, further gains in employment, rising wages and lower energy prices. in fact, bank