hitting the world economy and the importance of the ecb to respond to those shocks. looking at the world economy now, how big a risk is this trade war? so i think it is important to recognise that domestically the european economy has many positives. by the way the trade war does not extend to the single market, most trade in the european union, most trade for finland, a lot of that is going to be with the other members of the european union, which has no trade war. but unfortunately the trade war, the trade discussion between china and the united states does carry risks for the european economy and many firms here in finland sell to asia, to america, many firms across europe, so the quicker this trade dispute is settled the better for the european economy. 1 / 2 bis central bankers'speeches if we take another risk – brexit – how do you see that? again we have a situation now where there is a lot of uncertainty. either we will have a brexit that is negotiated or we have a no - deal brexit or there are other scenarios. so i think in the coming weeks and months we ’ ll get some answers, this cannot go on forever. i think everyone is indicating we need to come to a conclusion and once that conclusion is reached – especially if there is a reasonable negotiation, a reasonable outcome – then uncertainty will be reduced and that can be good news. on the other hand if it ’ s a no - deal brexit that will cause more disruption. and your favourite deal is? well again it ’ s up to the politicians. as for the ecb we will just respond to whatever happens. it ’ s up to the political leaders of the united kingdom to finalise brexit. in finland we always compare ourselves to sweden. when this first crisis hit sweden they kept doing well and finland not so well, and then comes this question of if it has been a good idea at all to be a member of economic and monetary union. how do you see this? so i ’ m a very big fan of the euro. i think it ’ s pretty important to recognise that without the ecb the crisis we had would have been worse. imagine the crisis of those years without a powerful shared central bank. if we had had 19 separate currencies during the crisis the outcome would have been worse. especially for small countries, the euro provides a lot of stability. i think increasingly as you know in the surveys the

aspect stands out which is of particular interest to investors, consumers and the financial markets at large - the recent sizable rise in oil prices. this is an important issue, and one on which clear and convincing communication from the central bank is warranted. oil prices, which reached historical highs in nominal us dollar terms in the last week of october, are a key factor determining near - term prospects for economic activity and inflation, both globally and in the euro area. as i noted earlier, persistently high and rising oil prices have had a visible direct impact on consumer prices in the euro area, and inflation is likely to remain above the upper limit of our definition of price stability of 2 % in the coming months. this is a worrisome development, although there is little indication that medium - term inflationary pressures are building up in the euro area. what would be the potential impact of a sustained rise in oil prices on key macroeconomic variables in quantitative terms? for purely illustrative purposes, and using a variety of macroeconomic models, ecb economists have estimated the potential impact of a hypothetical permanent oil price increase of 50 % on both inflation and output. according to these calculations, such an increase would add 0. 3 to 0. 6 percentage points to overall inflation in the euro area in the first year and 0. 1 to 0. 4 percentage points in the second year, before petering out in the third year ( 0. 0 to 0. 1 percentage points ). the estimated impact on output would be, of course, negative, dampening real gdp growth by 0. 1 to 0. 8 percentage points in the first year ; in subsequent years, the average cumulative impact suggested by these models would be roughly neutral ( - 0. 3 to 0. 2 percentage points in the second year ; - 0. 1 to 0. 4 percentage points in the third year ). needless to say, these estimates are surrounded by a high degree of uncertainty related to the model specifications and other factors, for instance, the assumed initial cyclical position of the economy, the nature of the oil price shock, and the possible existence of non - linearities in the transmission of the oil price shock to the economy. more importantly, these ( and other comparable ) simulations are based on the assumption that the monetary policy stance is given ; that is, the central bank ’ s interest rates are assumed to be kept constant and not to be adjusted in response to the impact of the oil price shock on inflation.