benoit cœure : interview in le monde and la stampa interview with mr benoit cœure, member of the executive board of the european central bank, in le monde and la stampa, conducted by ms marie charrel ( le monde ) and mr alessandro barbera ( la stampa ) on 3 july 2017 and published on 7 july 2017. * * * optimism is back in the euro area. are we at the beginning of a “ golden decade ”? it ’ s true that in the space of one year the situation has improved considerably. the euro area can be said to have entered a phase of economic expansion. the recovery has finally arrived. it has spread to virtually all sectors and countries. this is excellent news. but it would be unwise to let our guard down, because this recovery is of a cyclical nature and builds on significant support from monetary policy. there is still much to do to make it long - lasting. structural growth needs to be strengthened in each country and the euro area must be made more resilient to shocks. emmanuel macron ’ s election in france has rightly relaunched the discussions on strengthening the euro area. which area of work must be prioritised? the priority is reform in each country. that goes for france and italy, among others, but also for germany. for example, the rates of economic growth have now largely converged in the various euro area countries, but their per capita income levels still differ widely. this is a problem for the euro area. once each of the member states has done its share of the work, they will then be able to strengthen their joint structures. in the end, i think that this calls for stronger institutions, such as a finance ministry that is allocated a common budget, but let ’ s be careful not to put the cart before the horse. how can the germans be convinced to move towards this common budget? there will be no single budget policy, as the member states do not want one. pooling the budget is simply a tool that allows joint projects to be financed. to make progress in this area, it is necessary to sweep away the preconceptions that paralyse the discussions between the member states. in germany, for example, people think that berlin alone paid for the other countries during the crisis, which is not true. in france, the thinking is that europe is dominated by germany, which is also not the case. and in italy, the euro is held responsible for

result of consolidating growth. governments and financial players must prepare themselves for it. they are aware of that. do the divisions within the european central bank ( ecb ) over the withdrawal of exceptional monetary policy measures weaken its credibility? the european treaties chose for monetary policy to be steered by a governing council precisely to allow for the expression of different viewpoints. this range of opinions is an antidote to groupthink. what ’ s essential is to come to a consensus at the end of the discussion, which is nearly always what happens. there is no disagreement over the current monetary policy stance. how can one avoid the reduction of monetary support causing panic on the markets? the choices available to the ecb are too often caricatured by its observers. some fear that we might traumatise the financial markets if we turn the dial of monetary policy by a millimetre, while others prescribe a forced march towards normalisation. the reality is quite different. as early as last december, we scaled back our asset purchases without undermining the support given to the economy. so, i would argue that we have already adjusted our monetary policy, and this was made possible by the continued improvement in the economic situation. this adjustment has been done in a very careful way, as a number of factors continue to weigh on inflation. if needed, the governing council will continue to adjust its instruments both qualitatively and quantitatively. but when this is needed, it should do so carefully and flexibly, and based on what matters for us within the framework of our mandate : the inflation outlook. we must be transparent in our communications on these developments. otherwise we run the risk of a more abrupt adjustment for the markets when the decisions are actually taken. but inflation today is very close to the objective of 2 %... we base our decisions on facts, but make no mistake – without monetary support, inflation today would not be approaching 2 %. that gives us reason to be careful. the underlying inflationary pressures are still weak. another issue that we are monitoring closely is the impact of the ecb ’ s negative deposit rates on the banking sector and its capacity to support the economy. banks ’ profitability and the growth in credit show that fears over negative side - effects are not justified at present. in the light of these observations, there is no reason to change our strategy. some economists argue that low rates are contributing to speculative bubbles forming, in particular in the housing market