federal reserve system and the ecb, for reassurance. one of the sources of uncertainty for insurers ( and others, too ) is interest rates. in particular, quantitative easing, or qe, which affected the entire yield curve. aren ’ t interest rates gradually eluding market participants ’ expectations, leading them to wonder what sort of market equilibrium will exist at these rates? what constraints could affect the ecb ’ s decision - making? isn ’ t this a strong driver of cycles and uncertainty? market participants can see the benefits of central banks managing the yield curve, because it fosters economic activity and stability. it is true that part of how interest rates are set is eluding market mechanisms. nevertheless, we have to put this discussion into perspective. on the one hand, it ’ s nothing new : by design, monetary policy always has an impact on interest rates. on the other hand, since the start of qe and in all market segments, including sovereign debt as well as corporate debt, the ecb has always taken care not to suppress the price formation mechanism. as an example, this is one of the reasons why the ecb does not purchase more than 33 % of a sovereign issuance. central banks now have a strong influence on the entire yield curve, over a very long horizon. the counterpart to this is to be transparent towards the market and to provide visibility and predictability concerning how we are going to act. that ’ s the purpose of our forward guidance, 1 / 5 bis central bankers'speeches which clarifies our reaction function. forward guidance is not an unconditional commitment about what we are going to do. that ’ s not something we would be able to do and we wouldn ’ t be credible, as we necessarily react to new information flows we receive. it does, however, provide clarity about how our monetary policy incorporates these information flows. if we explain this reaction function to the markets clearly enough, then they can incorporate it into the price formation mechanisms. and we feel that this has worked rather well. the markets find the way we conduct forward guidance useful. today, particularly in the united states, there is a debate about whether forward guidance should be abolished and replaced with completely opportunistic policy that could be fairly arbitrary. this discussion makes sense when monetary policy normalisation is at a more advanced stage. after all, our monetary policy before the crisis did not include forward guidance and that seemed perfectly normal to everyone. once monetary policy

benoit cœure : interview in risques interview with mr benoit cœure, member of the executive board of the european central bank, in risques, conducted by messrs jean - herve lorenzi, francois - xavier albouy, arnaud chneiweiss, pierre - charles pradier and philippe trainar, on 4 february 2019 and published on 2 april 2019. * * * is it true to say that we ’ re in a more risky world today than we were ten or fifteen years ago? we ’ re in a period of political and technological change. this change is accelerating, especially in the field of technology, and market participants are probably underestimating it. in certain industries, including the financial industry, rapid technological change can lead create risks as well as opportunities. political risk is also evolving ; it ’ s moving into developed countries. i ’ ve just returned from meetings in south africa with african central banks. my african colleagues were saying : “ we africans have always known that we had to manage economic and developmental challenges and challenges stemming from political transition. but that was in an environment where we had some stability and an overview of what was happening in europe, the united states and china. but now the instability is coming from the united states and, to a certain extent, from europe and china. so now we have to learn to become a pillar of stability ourselves. ” that line of thinking, which is new for africa, is one we in europe have been following since 1957 : how, with our own economic and political tools, can we become self - sufficient and a pillar of stability ourselves? ever since frank knight ’ s work in the 1920s, economists have made a distinction between risk ( which is based on quantifiable probabilities ) and uncertainty ( which doesn ’ t lend itself to being quantified ). to take up this distinction again, you could say that we also find ourselves in a world where there is more uncertainty than risk, because the issues have become political in nature : uncertainty about the relationship between the united states and china – with all its trade, security and intellectual property consequences ; uncertainty about brexit … market participants are at a loss to form opinions in these circumstances. in fact, everyone is! this creates nondiversifiable risk which has no market price and leads to heightened anxiety. so it ’ s not surprising that markets are turning to the public sector, in particular central banks such as the