benoit cœure : the future of the euro area remarks by mr benoit cœure, member of the executive board of the european central bank, at le cercle europartenaires, paris, 21 march 2016. * * * the footnotes can be found at the end of the speech. president guigou, minister jeanneney, ambassador meyer - landrut, excellencies, ladies and gentlemen, thank you for inviting me here. this morning i would like to share with you some thoughts which echo your association ’ s motto “ acting for europe with europeans ”. role of the european central bank “ acting for europe with europeans ” could also be the ecb ’ s motto. one of its strengths is indeed its european mandate. the governing council takes its monetary policy decisions in the interest of the euro area as a whole, with a view to ensuring price stability. as a quid pro quo for its independence, the ecb is accountable for its actions to the people ’ s representatives, who are elected to the european parliament by direct universal suffrage. at a time when so many european citizens express doubts about europe, the duty of european institutions is to strengthen their legitimacy both by reinforcing their democratic accountability and by showing that they meet the objectives they ’ ve been entrusted with. regarding democratic accountability, it would be wrong to underestimate the importance the ecb places on its relationship with the public. recent studies show that people ’ s knowledge and understanding of the objectives and principles of monetary policy influence inflation expectations [ 1 ] as well as trust in the european central bank. [ 2 ] at the same time, these studies indicate that the level of knowledge and understanding can be further improved. we have taken several initiatives in this area in the last years, such as publishing the accounts of our monetary policy discussions and the diaries of the executive board members. but we can certainly do more to facilitate the understanding of the ecb ’ s role and policies by the general public. rebuilding trust in europe implies above all that european institutions deliver on the objectives which have been assigned to them as part of their mandates. during the crisis, the ecb did not hesitate to act decisively. [ 3 ] to preserve price stability, we have adopted an accommodative monetary policy stance that has no precedent. our measures, whether standard ( i. e. relating to the key interest rates ) or non - standard, have achieved several objectives. • they have supported demand for goods and services

envisaged in the projections for the recovery to materialise, for productivity growth to pick up, and for both to be sustained. but as economic conditions normalise, wage growth should gradually moderate over the medium term to be consistent with trend productivity growth and our inflation target. the improving inflation outlook, continued strong transmission and further moderation in inflation all create scope for more confidence that we can dial back restriction. we are coming closer to the point when we will have the confidence to act. thank you. annexes 27 march 2024 slides english 1. see lagarde, c. ( 2024 ), “ building confidence in the path ahead ”, speech at the ecb and its watchers xxiv conference, frankfurt am main, 20 march. 2. euro area employment increased by 3. 8 % from the fourth quarter of 2019 to the fourth quarter of 2023. 3. while the reopening of the economy led to a wave of pent - up demand facilitated by savings that had been accumulated during the pandemic, it was largely negative supply shocks – pandemic - induced supply bottlenecks, the energy crisis and russia ’ s war against ukraine – that drove the sharp spike in headline inflation. see arce, o. ciccarelli, m., kornprobst, a. and montes - galdon, c. ( 2024 ), “ what caused the euro area post - pandemic inflation? ”, occasional paper series, no 343, ecb, frankfurt am main. recent findings indicate that core inflation in the euro area was also largely driven by supply - side shocks during the post - pandemic recovery. see banbura, m., bobeica, e. and martinez hernandez, c. ( 2024 ), “ shocked to the core : a new model to understand euro area inflation ”, research bulletin, no 117, ecb, frankfurt am main. 4. the euro area imports around two - thirds of its energy, compared with just over one - fifth for the united states. 5. real compensation per employee declined by 3. 2 % in the first half of 2022 compared with the end of 2021. 6. nominal wage growth has also been bolstered by increases in minimum wages at the national level. 7. see eurostat data and march 2024 ecb staff macroeconomic projections. growth in nominal compensation per employee increased to 5. 1 % in 2023 ( up