sabine lautenschlager : interview in wirtschaftswoche interview with ms sabine lautenschlager, member of the executive board of the european central bank, in wirtschaftswoche, conducted by mr mark fehr and mr malte fischer and published on 2 april 2015. * * * ms lautenschlager, you have a unique role in the european central bank : not only do you have a say in the key ecb interest rates but, as vice - chair of the new banking supervision, you also monitor the institutions. do you manage to avoid conflicts of interest between monetary policy and supervision? i am a purist in this regard, so i strictly separate both of my tasks in order to avoid conflicts of interest. before contributing to a discussion, i always clarify whether i am speaking as a supervisor or as a monetary policy - maker. besides, in past crises, a supervisory model with a separation between the central bank and supervision was not shown to be more successful than the model with monetary policy and supervision under one roof. on which issues do conflicts of interest arise? different interests could play a role in, say, the emergency loans for banks facing liquidity problems. from the banking supervisor ’ s perspective, this liquidity assistance is initially welcome, because it gives the bank time to resolve problems. the monetary policy - maker must ask what transactions the liquidity will be used for, or whether the bank concerned is solvent. do you ever feel schizophrenic in your double role? no, i believe that i manage to separate both tasks. in each of the two roles, i focus on the objective of the respective task, i. e. first for monetary stability and second for safe banks. everything that goes on between monetary policy and banking supervision passes over my desk. and i am aware that, in my role, i have to act as a bridge and have to broker between the two sidess. in the long run, however, i see a separation of both tasks as the better choice. are the banks in the euro area stable enough to issue sufficient credit to businesses? the vast majority of european banks have enough capital and liquidity to enable them to expand their lending activities. but that in itself does not suffice. if we want to see sustainable and sound credit growth, banks will have to take a positive view of their customers ’ creditworthiness and thereby of their future prospects. and, as a rule, that is

not gotten the attention they deserve. in fact, the economy has been trapped in a downward spiral of low economic growth, worsening public finances, and social decline. in 2017 the government recorded a current budget deficit of naf. 116. 8 million. for 2018, however, the government expects a surplus of naf. 42 million on its budget, even though tax income has been lower than initially projected. meanwhile, curacao ’ s debt - to - gdp ratio has been increasing since 2012. curacao entered its status of autonomous country with a debt - to - gdp ratio of 34, 6 % in 2010. as you can see, today, the debt - to - gdp ratio exceeds 50 %. the government of curacao started to borrow in 2014 for the construction of the new hospital, hospital nobo otrobanda ( hno ). therefore, the government issued two bonds, totaling naf. 492. 5 million. currently, the financing of the construction of the hospital represents 17. 5 % of the total outstanding public debt and 8. 8 % of our gdp. nevertheless, an additional naf. 200. 0 million is still needed to finalize this project. there are two possible options to obtain these additional funds. first, the government can issue a naf. 200. 0 million bond loan resulting in a higher debt - to - gdp ratio. the second option is that hno directly borrows the required funds from local and international institutional investors, in this case the public debt to gdp ratio will not increase. it seems that this last option is being considered as the most viable one at this moment. however, there will be still risks involved for the government. assuming that the social security bank, svb, will have to guarantee the loan to the private institutional investors, in case of a default by the hospital, the svb will have to repay these debts. hence, this could affect the sustainability of the social insurances and, indirectly, the public finances. it will be crucial that the hospital is able to comply with the financial obligations towards its lenders in the future. therefore, continuous supervision on the hospital ’ s operations will be very important. finally, i would like to present some policy recommendations to address these risks and achieve a higher and more inclusive growth path. the considerable negative effects that external shocks, such as the situation in venezuela, have on our economies underscore the importance of strengthening our resilience. one of