yves mersch : “ ecb in between state rescue and monetary policy ” keynote speech by mr yves mersch, member of the executive board of the european central bank, at the “ welt ” wahrungskonferenz, berlin, 14 may 2014. * * * ladies and gentlemen, mutual trust is a precondition for effective cooperation between european institutions and between the national and european level – trust that each institution acts lawfully and within its area of responsibility. the separation of powers as well as checks and balances are fundamental achievements of modern democracies. but they do not mean that one authority acts vis - a - vis another in a spirit of mistrust and disrespect. even though the title of today ’ s discussion ( “ ecb in between state rescue and monetary policy ” ) may suggest otherwise, the ecb cannot, must not and will not “ save ” states. our actions are based on our monetary policy mandate, as defined in article 127 of the treaty on the functioning of the european union ( tfeu ) : the ecb is responsible for price stability in the euro area. like almost all central banks in the industrialised world, the ecb enjoys a high degree of independence. this independence is not a carte blanche for us central bankers. it provides protection, so that we can fulfil our mission free of political influence. at the same time, this privilege of political independence has a price : absolute respect for the limits of our mandate. the most effective way to be accountable to citizens as an independent institution is to assess if and to what extent we fulfil our price stability mission. and our results so far are beyond reproach. we have various instruments at our disposal to help us do justice to our mandate. the purchase of government bonds in the primary market is explicitly not among them because the monetary financing of governments is prohibited under the eu treaty. our mandate nevertheless includes the possibility of buying, under the appropriate conditions, government bonds on the secondary market ( so - called “ outright monetary transactions ” or omts ), should this be necessary from a monetary policy perspective. this option is explicitly stated in article 18. 1 of the escb / ecb statute. to illustrate this clear monetary policy orientation of omts, let me briefly recall the situation on the european capital markets in summer 2012. fears that the monetary union could break up had led to severe tensions on those markets. the government bond market was

of shared responsibility within a partnership of european courts. it respects the division of tasks between european and national legislation and can take the views of the european court as the basis for its judgement. conversely, the european court of justice will observe the limits of its jurisdiction and not intervene in the remit of the federal constitutional court. legal and political cooperation between the public administrations of the member states and the institutions of the european union functions when we respect each other and trust that we will act in the interests of our respective mandates and in accordance with the applicable law. this trust forms the basis of cooperation between member states and between member states and the european union and its institutions. it is based on the democratic values we share and which are explicitly laid down in the copenhagen criteria for new member states. we should preserve this trusting relationship – which supports europe as a diverse, complementary whole, founded on the european treaties. bis central bankers ’ speeches