christine lagarde : european parliament plenary debate on the ecb annual report speech by ms christine lagarde, president of the european central bank, at the plenary session of the european parliament, strasbourg, 15 february 2023. * * * i am very pleased to be back here in this plenary room – the heart of european democracy – to participate in today's important debate. the ecb was granted a democratic mandate to ensure price stability in the euro area. in other words, we safeguard one of the fundamental conditions for stable economic growth. to achieve this mandate, the ecb was also granted a high level of independence. and as you acknowledge in the draft resolution we are discussing today, the ecb's ability to take all necessary measures – free from political interference – is essential for it to deliver on its mandate. this is particularly important in the current environment. high inflation continues to have a large impact on all areas of our economy and on people's everyday lives – especially on low - income households, as you also note. this is why the governing council started a process of policy normalisation in december 2021 and raised the ecb interest rates by 300 basis points since july 2022. at its february meeting, the governing council emphasised its determination to stay the course in raising interest rates significantly at a steady pace and in keeping them at levels that are sufficiently restrictive to ensure a timely return of inflation to our 2 % medium - term target. but independence also comes with a great deal of responsibility – the choices we make as central bankers have a significant influence on society. so being accountable for our decisions is the necessary counterweight to our independence. this means that we need to explain our policies, and the analysis that underpins them, to ensure that people understand how our decisions are taken. but it also means that we must be attentive to the concerns of the public and carefully evaluate whether and how we can respond to these concerns within our mandate. after all, reinforcing trust in our institution also supports our monetary policy, for example by anchoring inflation expectations. today's debate on your draft resolution is crucial in both these aspects. i am here today to explain our policies, but also to listen to your views as elected representatives of european citizens, and to further reflect on how the ecb can act for the benefit of all europeans. the euro area economy 1 / 5 bis - central bankers'speeches let me start by briefly outlining our assessment

what purpose is the new form of money supposed to serve? and second, how can cbdc achieve its goals without compromising other central bank objectives such as price stability and ﬁnancial stability? clearly, central banks must ensure that the good that comes with cbdc more than outweighs any harm it might cause. that ’ s why benoi t ( tonne ) cœure calls for a “ monetary hippocratic oath ” in this context. we would need to make many important economic and technical choices on the design of cbdc. for example, should we use a token or an account - based system? should cbdc be issued directly to consumers or through intermediaries? should it bear interest or not? many more issues would have to be resolved. [ 4 ] all these characteristics must be tailored to the purpose of the new currency and to curtail potential side effects. 2. 1 potential benefits several arguments have been suggested in favour of cbdc, and i would like to highlight three of them. first, cbdc is often expected to be a practically costless medium of exchange, making economic and ﬁnancial transactions more [UNK]. [ 5 ] according to researchers at the bank of england, cbdc could give rise to productivity gains similar to those of a substantial reduction in distortionary taxes. [ 6 ] its availability may enable transactions to be made that have not previously been possible due to a lack of suitable payment medium. think of the small businesses that have potentially steered clear of online transactions because of the card processing fees. consumers, on the other hand, might have shied away from submitting their card information owing to security or privacy concerns. in the end, cbdc could increase the production of those goods that can be purchased with it and thereby raise total output. [ 8 ] take micropayments, for instance : if they became cheaper than they are today, cbdc could allow for new services and business models to take hold. for example, individual news articles could be sold online for a few cents and help ﬁnance journalistic efforts. of course, innovative payment solutions by private providers can also raise [UNK]. but there is a second argument in favour of cbdc : preserving ﬁnancial sovereignty. in view of facebook ’ s stablecoin initiative and other efforts, politicians have grown increasingly worried that bigtech companies could come to dominate payments in europe. in this context, cbdc is often regarded as a public alternative to foreign payment initiatives. yet