benoit cœure : interview with the robert schuman foundation interview by mr benoit cœure, member of the executive board of the european central bank, with the robert schuman foundation, conducted by mr jean paul betbeze, president of the scientific committee of the robert schuman foundation, 8 september 2014. * * * what is your analysis of the situation in the euro area? the euro area is at a crossroads. on the one hand, it has come through the financial crisis. on the other, it faces major challenges in terms of growth. if we consider, first, the financial crisis, the most crucial point came mid - 2012. it was passed successfully thanks to a series of support messages sent to the countries in difficulty. thus, after the commitment made by all the political leaders about the future of the euro and the integrity of the euro area, came that of the president of the european central bank, mario draghi ( “ whatever it takes ” ) and the introduction of the omts ( outright monetary transactions ), to re - establish the efficacy of monetary policy in countries which find themselves under serious financial pressure. of course, this support is conditional on a country ’ s commitments in terms of improving its accounts and of reform, which are monitored by the european union and the imf. but it allows the ecb to purchase treasury bonds from this state on the secondary market. these two messages have led to a decline in speculation everywhere. and they were credible because the countries were oriented towards reform. then there is banking union. in just two years, this organisation that brings together a harmonised banking surveillance within the ecb ( ssm : single surveillance mechanism ), a harmonised bank crisis resolution system ( srm : single resolution mechanism ), which has a single resolution fund, and investor bail - in rules before any call is made for public funds, have greatly strengthened the structure of the euro area. it might even be said that the banking union, owing to its long term effects on the functioning of the european economy, is as important as the creation of the euro. and it was set up in two years! so, from a financial point of view, the worst of the crisis is behind us, with extremely strong, credible commitments on the part of the authorities, as well as these new institutions which strengthen the solidity of monetary union. on the other hand, however, we have to admit that growth is too weak and unemployment far too high,

we are contemplating such a move. wouldn ’ t negative rates discourage people from keeping their money in banks? this depends on how negative they would be. indeed, rates that fall deep into negative territory could have an impact on depositors. but a deposit rate slightly below zero does not necessarily imply that depositors would be affected, while still providing incentives for banks to lend more. in recent years, the ecb has used a number of non - standard monetary policy tools. it has purchased bonds on the market, pumped hundreds of billions of euro into the market in the form of cheap loans for banks. the ecb has had to use different instruments at different stages of the crisis. now the economic and financial situation in europe is significantly better. financial fragmentation has receded, member states have made significant efforts towards economic convergence and the governance of the euro area has been strengthened. we are gradually moving out of the bis central bankers ’ speeches crisis phase into a different environment, with the focus shifting from solving the crisis to ensuring stable economic growth and inflation close to 2 %. it requires a different approach and different instruments. the developments beyond our eastern border are the big topic of debate in poland at the moment. could the conflict between russia and the ukraine affect europe and its economy in any way? the impact on trade or the financial system has thus far been limited. but this situation does give rise to uncertainty, so it can be regarded as a potential negative factor that could hinder economic growth in europe, and that is part of our risk assessment. what about the strong euro? aren ’ t you worried it could cause problems for european exporters and hinder the recovery? the ecb doesn ’ t target the exchange rate. our primary mandate is price stability, and within this mandate, the exchange rate of the euro is among the factors determining the level of inflation. and indeed, the strong euro is contributing to the current low inflation. consequently, any further strengthening of the euro strengthens the case for more policy action by the ecb aimed at bringing inflation closer to 2 %. is there a risk of global currency wars? each country wants to overcome the crisis as quickly as possible and the easiest way is to weaken its currency and thus improve the position of its exporters. these issues have been discussed many times, including among the g20. countries have agreed that the exchange rate should not become a target for monetary policy. as long as the exchange rates are driven by the various countries ’ internal situations and