mario draghi : hearing of the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, at the econ committee of the european parliament, brussels, 9 july 2018. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, it is a pleasure to be back at the european parliament before your committee. since we last met, the ecb ’ s governing council has taken important decisions on the recalibration of our monetary policy stance after september this year. in my remarks today, i will outline these decisions and explain the assessment of the current economic environment on which they were based. following the recent euro area summit, i will also take this opportunity to discuss the future of our economic and monetary union ( emu ), pointing to priorities for the near term from an ecb perspective. economic and inflation developments the euro area economy grew by 0. 4 % during the first quarter of 2018, marking five years of continued economic expansion. underlying economic fundamentals remain solid, notwithstanding some moderation in growth at the beginning of the year. the labour market has improved notably over recent years. employment has risen by 8. 4 million since mid - 2013, and is growing in nearly all euro area countries. the unemployment rate stood at 8. 4 % in may, its lowest level since december 2008, and labour force participation now stands at an all - time high. looking ahead, the latest eurosystem staff macroeconomic projections foresee average annual growth of 2. 1 % in 2018, 1. 9 % in 2019 and 1. 7 % in 2020. while uncertainties related to global factors, including the threat of increased protectionism, have become more prominent, the risks surrounding the euro area growth outlook remain broadly balanced. of course, we continue to closely monitor developments. according to the eurostat flash estimate, headline inflation increased to 2. 0 % in june from 1. 9 % in may, reflecting higher rates of energy and food inflation. excluding these more volatile items, inflation decreased from 1. 1 % in may to 1. 0 % in june. as the economy continues to grow and slack is absorbed, supporting rising wages, underlying inflation is expected to pick up. recent wage agreements in several countries point to a continuation of these favourable dynamics. i will discuss the inflation outlook in more detail as i explain the monetary policy decisions taken by the governing council in june. the ecb

, as would the relationship between a cbdc and euro banknotes and coins, along with the process by which one could be exchanged for the other. should it not be acknowledged that the ecb ’ s exclusive right to authorise issuance in euro would also be applicable to a digital issuance? a retail cbdc could be based on digital tokens, which would circulate in a decentralised manner – that is without a central ledger – and allow for anonymity towards the central bank, similar to cash. some argue that a token - based digital currency might not guarantee complete anonymity. if that proved to be the case, it would inevitably raise social, political and legal issues. we are currently looking into the legal questions raised by the potential use of intermediaries to facilitate the circulation of a cbdc and also the processing of transactions in a cbdc. to what extent are we permitted to outsource public law tasks to private entities? and what would be the appropriate extent of supervision over such entities? alternatively, a retail cbdc could be based on deposit accounts with the central bank. though involving vast numbers of accounts, it would not be a particularly innovative option from a technological viewpoint. for the euro area, it would basically mean increasing the number of current deposit accounts offered from around ten thousand to between 300 and 500 million. a cbdc of this nature would enable the central bank to register transfers between users, thereby providing protection against money laundering and other illicit uses ( or those considered illicit by the rulers of the day ), depending on the degree of privacy granted to users. these are just two of the many ways to design a cbdc. we are currently scrutinising the various options to assess their potential impact – both positive and negative – on the financial system and on our ability to honour our mandate. disintermediation – economically inefficient and legally untenable you may wonder why central banks have not chosen to provide retail access to central bank money, despite the technology for an account - based cbdc already being largely available. the main reason is that introducing a retail cbdc could have major consequences for the financial system. 2 / 4 bis central bankers'speeches if households were able to convert commercial bank deposits into a cbdc at a rate of 1 to 1, they may find it far more attractive to hold a risk - free cbdc rather than bank deposits. during a systemic banking crisis, this could trigger digital bank