olli rehn : counter - cyclical burden - sharing of fiscal and monetary policy opening remarks by mr olli rehn, governor of the bank of finland, at the bank of finland seminar on the 2018 annual report of the european fiscal board, helsinki, 18 march 2019. * * * professor thygesen, dr szczurek, ladies and gentlemen, let me welcome you to this bank of finland seminar on euro area fiscal policy, more specifically on the annual report 2018 of the european fiscal board. we are honoured and glad to have professor thygesen and dr szczurek present the report to us today. let me open this seminar with brief remarks on the interaction between fiscal and monetary policy, which also explains the bank of finland ’ s strong interest on the issue. gdp growth in the euro area turned out to be unexpectedly sluggish in the fourth quarter of 2018, and recent indicators point to substantially weaker than expected activity also in 2019. a combination of global uncertainties and adverse domestic factors in some euro area countries are likely to continue to weigh on euro area activity in the short term. on the back of the weakened economic outlook, the ecb governing council recently took a number of important decisions in pursuit of its price stability objective : first, a commitment to keep the key policy interest rates unchanged for an extended period of time ; second, a commitment to continue reinvesting maturing securities under the asset purchase programme for an extended period of time ; and third, launching a new series of targeted longer - term refinancing operations ( tltro - iii ), starting in september 2019. in the press conference on 7 march, president draghi underlined that to reap the full benefits from the ecb ’ s monetary policy measures, other policy areas must contribute more decisively to raise the growth potential and reduce vulnerabilities. for the longer term, implementation of structural reforms is key to boost euro area productivity and growth potential. regarding fiscal policies, the mildly expansionary euro area fiscal stance today and the operation of automatic stabilisers are providing support to economic activity. however, the prolonged low interest rate environment, as well as the available alternatives to the interest rate as a monetary policy instrument, pose their particular challenges for monetary policy design and transmission. therefore, it may be asked whether a more even balance between monetary and fiscal policy stances would be desirable in order to sustain the growth momentum in the current conjuncture. this point has been brought

between people, covering online shopping as well as bricks and mortar businesses. we have laid down several basic requirements for a digital euro, such as easy accessibility, robustness, safety, efficiency, privacy and compliance with the law. these will help us define what a digital euro might eventually look like. importantly, a digital euro would be designed to work together with private payment solutions, facilitating the provision of pan - european solutions and services to consumers. with global cooperation it could eventually also solve many of the issues plaguing cross - border payments. so why should we introduce a digital euro alongside cash? would it not be enough to rely on the private sector to provide us with efficient payment means for the digital age? recent market developments have highlighted the fact that crypto - assets are fundamentally different from central bank money. their prices are volatile, which makes them hard to use as means of payment or units of account. even stablecoins attempting to piggyback on the credibility provided by central bank money have failed to guarantee one - to - one convertibility with it. as the bis meticulously pointed out in their recent annual economic report, crypto - assets'limitations are structural. an economy dominated by digital payments but without a strong monetary anchor would be inherently unstable. federal reserve vice chair lael brainard also recently noted that, given the foundational role of fiat currency, a digital native form of safe central bank money could enhance stability by providing the neutral trusted settlement layer in the future financial system. people using a digital euro, or a digital dollar, should have the same level of confidence as they would when using cash, since both fiat and digital forms of currency would be backed by a central bank. a digital payment landscape without a monetary anchor provided by the central bank would simply confuse people's understanding of what qualifies as money. 3 / 5 bis - central bankers'speeches the transformation of the payments landscape also raises important questions about the security of a monetary system in the digital age. digitalisation is making financial services more efficient but leaving them more vulnerable to cyber - attacks and other forms of cyber risks. these risks and hybrid forms of influence have increased in the current environment of heightened geopolitical tensions, not least as a result of russia's invasion of ukraine. the vulnerability of the crypto ecosystem to hacks and theft as well as its capacity to facilitate financial crime, money laundering and other illegal activities is another reason to offer safe and legal means of payment in the digital