peter praet : interview in expresso interview with mr peter praet, member of the executive board of the european central bank, in expresso, conducted by mr joao silvestre on 18 june 2018 and published on 23 june 2018. * * * is the asset purchase programme ( app ) really going to conclude at the end of this year? what we did last week was to express an anticipation that net asset purchases would end at the end of the year. we didn ’ t say we were now deciding to stop the programme in december. we still have six months to go. we translated the increased confidence we expressed about developments in the economy and inflation into an anticipation about the app. and, at the same time, we also enhanced the forward guidance on interest rates. but, in any event, to anticipate the end of the programme is to give a strong signal. what exactly do you mean by giving a strong signal? we undertook a careful review of the progress made towards a sustained adjustment in the path of inflation to levels below, but close to, 2 %. it was a strong signal because, in spite of a recent moderation in euro area economic growth, we concluded that progress towards our aim has been substantial so far, and actually sufficiently substantial for us to be in a position to express this anticipation of an end to net asset purchases at the end of the year. we think that the underlying strength of the economy gives grounds that inflation convergence will continue in the period ahead, even after a gradual winding down of net asset purchases. what is that confidence based on? there is a path of gradual improvement towards our inflation aim, as the euro area economy will continue to grow above potential. increasing pressure on the utilisation of resources, notably in the labour market, will continue to support inflation over the medium term. is the ecb comfortable with the recent projection pointing to annual inflation of 1. 7 % over the period to 2020, clearly below the 2 % aim for these three years? the eurosystem staff projections are only one element of our assessment. what is crucial is that we see a sustained path of adjustment of inflation towards levels that are below, but close to, 2 %. over the projection period, the contribution of energy to inflation declines, and inflation excluding energy and food gradually rises, as capacity constraints become increasingly binding. what the ecb anticipated last week was the halving of asset purchases between october and december. but there was a provis

banks that monetary policies geared towards domestic price stability, sound public finances and flexible economic structures do create the conditions for long - term economic growth and financial stability. 2. 3 more international convergence in liquidity frameworks? since august 2007 central banks have responded in a variety of ways to the financial market disruptions, reflecting differences in the extent to which markets have been hit by the turbulences, and differences in the design of their operational frameworks. however, in general all major central banks stepped up their intermediation role with a view to addressing the liquidity squeeze and, in doing so, they showed a certain degree of convergence in operating procedures. in particular, central banks : • pursued more active reserve management, reassuring banks of their orderly access to overnight funds and increasing the frequency of their operations. • increased the supply of funds ( notably long - term ) ; expanded to varying degrees the definition of collateral accepted in collateralised lending operations ; provided access to collateralised lending to a large number of counterparties. • adapted tender procedures for open market operations in the direction of price rather than quantity - based schemes, akin to those used for standing facilities. • as the turbulence developed, central banks strengthened their cooperation through enhanced communication and collective market monitoring and coordinated actions to provide liquidity. in this respect, a significant number of swap lines between central banks have been set up to facilitate the distribution of foreign currency liquidity to domestic counterparties. overall, one lesson we can draw from the turmoil is that there are certain key operational features that facilitate the implementation of monetary policy under stress. in particular, central banks are better positioned to distribute reserves effectively — when the interbank lending is impaired — if they are capable of providing access to collateralised lending operations on a large scale to a wide set of counterparties and against a broad range of collateral. yet, a very important issue, on which i myself have no clear answer, is how – not so much whether but rather how – this convergence in the understanding of the “ optimal ” features of the operational framework under stress, should be reflected by the design of the operational framework in the steady state. for this, we need, in particular, to develop a better understanding of the optimal mix between private market and central bank intermediation and we need to carefully liaise with supervisory bodies. i should clarify that when i say “ optimal ” in this context, i do not mean “ uniform ”. to the extent that monetary policy strategies, central banks ’ status vis