benoit cœure : interview in le parisien interview with mr benoit cœure, member of the executive board of the european central bank, in le parisien, conducted by mr matthieu pelloli and published on 11 february 2016. * * * you never see it in france, you won ’ t get it from an atm and most shops don ’ t accept it … nowadays, how can the ecb justify the existence of the €500 note? banknotes are an important means of payment in the day - to - day lives of europeans. originally, the €500 note was issued in response to a number of euro area countries wanting a euro banknote that corresponded to the highest - value note in their former national currency. it ’ s true that it ’ s very rarely used in france, but it is used more in other euro area countries, both as a means of payment and as a store of value. wasn ’ t a new series of banknotes launched recently? is this under way? or envisaged? the second series of euro banknotes is currently being introduced. new €5, €10 and €20 notes, which have even better protection against counterfeiting, have already been introduced and can be found in people ’ s wallets. the higher - value notes will be introduced gradually. a european commission draft document denounces “ the strong demand for €500 notes from organised crime ”. the head of the european anti - fraud office ( olaf ) recently called for the €500 note to be removed from circulation for the same reasons. what is the ecb ’ s position on this? historically, these notes have enabled private individuals to make large payments in a convenient way. but this argument has become increasingly less relevant with the development of electronic payments. further, the competent authorities increasingly suspect that they are being used for illegal purposes, an argument that we can no longer ignore given the importance of the fight against money laundering and terrorist financing. mario draghi recently declared before the european parliament : “ rest assured that we are determined not to see these high - value notes become a tool for criminals ”. is the ecb preparing itself for some radical decisions regarding the future of the €500 note? we are actively considering this issue and will take a decision soon. you are a member of the ecb ’ s executive board. what ’ s your personal position? i find the arguments in favour of keeping the €500 note less and less convincing. among the

there is no national market which could act as a substitute, not only due to volume constraints, but also because no government security in the euro area is truly risk - free. the prohibition on monetary financing means that every sovereign bond carries a degree of credit risk. in this context, asset purchases of the size we deemed appropriate must inevitably be implemented in multiple markets. and that means monetary policy operations may unwittingly impact on credit allocation across regions and types of borrowers. that is not unusual – all monetary policy has allocative consequences. nor does it create a limit on us fulfilling our mandate. but it does require that we aim to mitigate those consequences, under the constraint that we achieve our price stability objective. that can be done in two ways. the first is by designing our monetary policy instruments in a way that minimises distortions. we did this under the app by intervening mainly in the most “ commoditised ” asset classes, i. e. the government bond markets in each country, and by spreading our interventions proportionally across jurisdictions. that effectively constructs a diversified pan - euro area portfolio. second, allocative effects can also be reduced by further integrating the markets in which we intervene, in particular government bonds. to that end, a robust fiscal framework which is enforced credibly would reduce the risk inherent in individual government bonds in the euro area, which would in turn make the impact of interventions in different markets more homogenous. still, there can be no doubt that if we needed to adopt a more expansionary policy, the risk of side effects would not stand in our way. we always aim to limit the distortions caused by our policy, but what comes first is the price stability objective. that is the implication of the principle of monetary dominance, which is embedded in the treaty and which lends monetary policy its credibility. monetary dominance means that we can – indeed we should – acknowledge and draw attention to all the consequences, intended or unintended, of our monetary policy operations. but it also means that we should never fail to deliver on our mandate solely on account of those consequences. doing so would be tantamount to redrafting our mandate under the law, something we are not at liberty to do. conclusion let me summarise. there are forces in the global economy today that are conspiring to hold inflation down. those forces might cause inflation to return more slowly to our objective. but there is no reason why