bostjan vasle : introductory remarks - 9th european central bank conference on central, eastern and south - eastern european countries introductory remarks by mr bostjan vasle, governor of bank of slovenia, at the panel of the 9th european central bank conference on central and south - eastern european ( cesee ) countries, frankfurt am main, 17 july 2023. * * * the major shocks of the past few years, namely the outbreak of the pandemic and russian invasion on ukraine, have importantly shaped today's macroeconomic and financial landscape and the implementation of economic policies. after the pandemic period, when there was a need for coordinated policy response to preserve economic capacities, and the initial period of russian aggression, when certain, but more targeted support was still justified, we entered last year a phase of persistently high inflation that requires a coordinated effort of policies in the opposite, i. e. restrictive, direction. a unique confluence of shocks and circumstances led to a high rise in inflation, the reduction of which has been the main focus of our monetary policy over the last year. in the first phase, inflation was primarily supply - side driven, reflecting the shattered supply chains during the covid period and the distress on commodity markets after the russian invasion of ukraine. owing also to strong pass - through of energy prices into non - energy components of inflation, the inflation has turned more persistent and widespread than expected. this holds particularly true for cesee economies, where reliance on trade and energy imports from russia has been relatively higher compared to the eu average. with dissipation of the global supply shocks, headline inflation in the euro area has eased from last year's peak, while core inflation remains stubbornly high. in the eurosystem, we have responded decisively to these developments. since july last year, we have increased our key interest rates by four percentage points, the fastest pace since the introduction of the euro. half a year earlier, we also started to phase out our unconventional monetary policy measures. in the wake of shocks, persistently high inflation and global monetary tightening, the real economic activity has so far been surprisingly resilient. while the growth momentum weakened significantly in the last few quarters, capacity utilisation remains high and the labour market tight, putting pressure on underlying inflation. within the euro area, the economic recovery from the pandemic has been particularly fast in the cesee region. in addition to fundamental convergence, growth discrepancies also reflect differences

responsiveness and the political upgrading of the european commission, while safeguarding its specificity : the monopoly initiative, the coexistence between its politicallawmaking and executive functions and – the cornerstone of its institutional role – the equal representation of member states in its collegiate managing body. these days, the european commission is a key body for ensuring the existence and functioning of the european union as a whole and crucial in terms of thinking and projecting this aggregate in the future. indeed, as european integration progresses further, the european commission has evolved from being a fundamentally lawmaking body to being an entity that today combines executive and legislative functions. given the european commission ’ s current architecture, it is very difficult to combine both functions. in my opinion, the commission should, in the long run, adopt an internal organisation model similar to that of the european central bank. this means establishing a board of commissioners comprising a commissioner from each member state, who, in the scope of a collegiate body, will participate in the decision of policy guidelines and associated legislative proposals, and an executive board that will manage the day - to - day business and the implementation of policies defined by the board of commissioners. the executive board would consist of a small group of commissioners, in proportion to the scope of executive powers entrusted to the commission, appointed on a rotational basis amongst member states. for instance, the definition of an energy policy or the european digital policy should be a task for all commissioners ( and not only the commissioner in charge of such areas ), but decisions on the purchase of a building or on staff policy could be delegated to the executive board. in this context, we should revisit the concept of subsidiarity, but in contrast to what was used in the past ( when it only gave powers back to local authorities ). we must develop on a bidirectional concept, locating at aggregate level issues that are being handled in a disperse and uncoordinated manner by the parts, to the detriment of optimisation. the principle of equality between member states tends to be sacrificed to the principle of “ who moves first ” or “ who weighs more ”, as was the case, for instance, in energy policy. this is something we should ponder on, even though this falls within the scope of what is desirable, and, therefore, for the medium run. thank you very much. bis central bankers ’ speeches bis central bankers ’ speeches