benoit cœure : interview in handelsblatt interview with mr benoit cœure, member of the executive board of the european central bank, in handelsblatt, conducted by mr jan mallien and mr frank wiebe on 15 november and published on 21 november 2017. * * * mr cœure, the european central bank ( ecb ) took on a very important role in stabilising the euro area during the crisis. how can europe avoid overburdening the ecb with problems which should be solved by politicians? to avoid overburdening the ecb, the euro area needs a strong economic pillar and a strong fiscal pillar. and let me add a personal remark : the world today is in disarray. it needs europe to provide economic stability and political direction. europe, therefore, has to be strong and have a clear sense of where it wants to go. in order to become stronger, europe is discussing the banking union, a euro area budget and a sort of european monetary fund. what is your take on these issues? we are glad that the discussion on the future of europe and the euro has restarted. as a central bank, we shouldn ’ t interfere in the details of a political debate. but we have a stake in it. the crisis forced us to design instruments that made it possible to address a very difficult situation. we have done this within our mandate, as the european court of justice has confirmed. but we don ’ t know what the next crisis will look like. and we don ’ t want it to test the limits of our mandate. what is the most important issue, if you want to prevent that? completing the banking union is a priority. this includes a common deposit insurance scheme and further progress to reduce risks in the banking system. it also means that all banks should operate and be supervised in the same way. it ’ s a whole set of measures. some may require legal changes, as the ecb ’ s banking supervision and the european commission have suggested. this will take time. there have been arguments about non - performing loans ( npls ) in italy. italian politicians have criticised the ecb ’ s plan to clean up banks ’ balance sheets. what is your response? i am not a lawyer, but i understand the recent guidance provided by the ecb ’ s banking supervision to be a clarification of how it will assess banks ’ actions with regard to future npls. it has provided similar clarity

different visions regarding this framework. is there a chance of them reaching an agreement? france and germany have a duty to agree! in recent eu history, they have always had different starting points, and always ended up agreeing. but the other countries also have to be heard and respected. it will be a long discussion, which is why it needs to start soon. how long will it take? my preference is for the discussion to take a bit longer and lead to a strong outcome, as opposed to rushing it and producing only a symbolic outcome. the real deadline is the european parliament elections in the spring of 2019. let ’ s move on to your core task, monetary policy. at its october meeting the governing council decided to halve the monthly asset purchases from the beginning of next year, and keep on buying at least until the end of september. why don ’ t you go to zero? the european recovery is the strongest for the last decade, and the broadest for the last two decades. but inflation remains weak. there are some signs that it is ticking up, but it remains dependent on our monetary support. also in germany, inflationary pressures are surprisingly subdued. there is very broad agreement in the governing council that monetary policy needs to remain accommodative until inflation moves back towards 2 % in a sustainable way. some members of the governing council have argued for a specific end date of the purchases. why have you opted against that? most members agreed that we need flexibility on the end date because september 2018 is still far away, and many things can happen in the global economy between now and then. but there is a growing sense that the effectiveness of our monetary policy is now less reliant on our net asset purchases. why? as mario draghi explained in his press conference, our monetary support relies on three 2 / 5 bis central bankers'speeches elements : monthly net asset purchases, the stock of acquired assets and forthcoming reinvestments, and our forward guidance on interest rates. in particular, we have now purchased so many bonds that the impact on financial conditions of this very large stock of bonds is sizeable, meaning that we can buy less month after month without jeopardising the effectiveness of our purchases. could you explain that in a bit more detail? there are several reasons for this. we will reduce the pace of purchases but will still buy more bonds than will be supplied next year, which will keep long term interest rates low. for example, there is ample