yves mersch : launching the ecb - coordinated technical cooperation with central banks of the western balkans introductory remarks by mr yves mersch, member of the executive board of the european central bank, at the press conference on the opening of cooperation programme in western balkans, tirana, 17 april 2014. * * * dear governors, your excellencies, ladies and gentlemen, it is a pleasure for me to be in tirana today to launch the ecb - coordinated technical cooperation programme with central banks of the western balkan region. let me first thank governor fullani for his warm hospitality. i am pleased that governor fullani, governor hamza and vice governor bajrami could all join me for this occasion today. this is the seventh ecb - coordinated programme for the benefit of central banks of eu candidate countries and potential candidates from the western balkans. i think this underscores the commitment of my central bank colleagues in the region to the process of european integration and to the further development of their institutions along the path towards european central banking standards. the current programme has again received funding from the european commission, through the instrument for pre - accession assistance. i would like to express my gratitude to the european commission, represented here by mr rumbold, for the continuous support of these activities. the programme is also a re - affirmation of the strong commitment of the ecb and the entire central banking community in the eu to their counterparts in the western balkan region. since 2007, the ecb, in partnership with the national central banks of the eurosystem and the european system of central banks ( escb ), has conducted one regional and five bilateral technical cooperation programmes. the programme that we are launching today will be implemented with the support of experts from 11 central banks in the eu, namely those of bulgaria, the czech republic, germany, france, italy, malta, the netherlands, austria, portugal, slovenia and slovakia. the number of partner national central banks in this programme is a clear indication that our institutions have not become inward - looking, despite the major challenges faced over the past few years. i would like to use this opportunity to thank the experts from all central banks for their dedication and commitment in taking on this additional assignment. the purpose of the programme is to prepare the central banks of the region for membership of the escb, once their respective countries join the eu. we are starting the programme here in tirana today. over the next six months, the experts from our side will conduct an

warrant. at the same time, i have also made clear that some of those measures may have unintended consequences. this does not mean that they should not be used, but it does mean that we need to be aware of those consequences and manage them appropriately. we will look with an open mind at these measures that are especially effective in our institutional setup and that fall within our mandate. this leads me to the second dimension of discussion of the limitations of monetary policy, namely the risk of a blurring of the boundaries of central bank policy. to approach this question, it is useful to refer to the framework put forward by another prominent scholar in central bank matters. marvin goodfriend classifies central bank actions into three categories3. the first category is what he calls “ monetary policy ” proper – changes in the size of the monetary base via purchases and sales of government securities. second comes “ credit policy ” – changes in the composition of the central bank ’ s assets between government securities and claims on the private sector of various kinds. see p. praet, monetary policy in the context of balance sheet adjustments, speech at peterson institute for international economics, 22 may 2013. see goodfriend, m., 2011, central banking in the credit turmoil : an assessment of federal reserve practice, journal of monetary economics, 58 ( 1 ), 1 – 12. bis central bankers ’ speeches third is “ interest on reserves policy ” – changes in the opportunity cost for banks to hold reserves or excess reserves. goodfriend argues that all three categories have fiscal implications. and he states that credit policy and interest on reserve policy involve the use of public funds in a way that may imply an allocative role – and which may therefore blur the respective roles of the monetary and fiscal authorities. in this context, it is worth recalling that the monetary constitution of the ecb is firmly grounded in the principles of ‘ ordoliberalism ’, particularly two of its central tenets : • first, a clear separation of power and objectives between authorities ; • and second, adherence to the principles of an open market economy with free competition, favouring an efficient allocation of resources. more explicitly, and by reference to another famous framework – the three basic policy functions that richard musgrave described as allocation, stabilisation, and distribution, and which aim delivering what tommaso padoa - schioppa later described as efficiency, stability and equity – our policy is concerned only with