luis de guindos : presentation of the european central bank annual report 2023 to the committee on economic and monetary affairs of the european parliament introductory remarks by mr luis de guindos, vice - president of the european central bank, to the committee on economic and monetary affairs of the european parliament, brussels, 18 april 2024. * * * introduction i am pleased to appear before this committee to present the ecb's annual report for 20231, a year in which the ecb consolidated progress in its fight against inflation. as well as assessing economic developments in the euro area in 2023, our annual report gives an account of the eurosystem's monetary policy and other activities conducted by the european system of central banks ( escb ). in response to european parliament resolutions, it also includes a box explaining how the ecb's secondary objective is considered in the conduct of the ecb's monetary policy and reporting activities. today we are also publishing our written feedback statement, which provides responses to the european parliament's resolution on our previous annual report. 2 in my remarks today, i will start by focusing on the economic outlook for the euro area and the monetary policy decisions taken at our recent monetary policy meeting. i will then briefly update you on our current financial stability assessment before going on to discuss the importance of a resilient financial system. the euro area economy and our monetary policy as detailed in the annual report, euro area growth slowed to 0. 4 % in 2023 after expanding by 3. 4 % in 2022. this slowdown was to some extent attributable to the economic repercussions of russia's war against ukraine. the impact of higher interest rates alongside spillover effects from the weak industrial sector to services also weighed on growth. euro area headline inflation declined by 6. 3 percentage points over the course of 2023 to reach 2. 9 % at the end of the year. the decline was broad based across all the main components of inflation, reflecting the fading impact of previous large supply shocks, lower energy commodity prices and tight monetary policy. this year, economic indicators suggest that activity has got off to a weak start and will recover only gradually. consumer spending is set to remain sluggish in the near term but should strengthen as real disposable income continues to recover. private investment is expected to show continued weakness in the period ahead before the impact of weak final demand and tight financing conditions starts to fade. 1 /

and solidarity. stability, because the euro ensured that the single market could be insulated from currency fluctuations while making speculative attacks on euro area currencies impossible. sovereignty, because adopting a single monetary policy at the european level would increase europe's policy independence vis - a - vis other large players. and solidarity, because the euro would become the most powerful and tangible symbol of european unity that people would encounter in their day - to - day lives. the euro through the crises we can be grateful for the foresight of europe's visionary founders. when the euro was born on 1 january 1999, they could never have imagined the crises that lay ahead. the first president of the ecb, wim duisenberg, faced 9 / 11 and the dotcom crisis. his successor, jean - claude trichet, had to navigate the global financial crisis and the sovereign debt crisis in its early days, which my predecessor, mario draghi, inherited. he had to contend with fears about the future of the euro area, followed by a prolonged period of too - low inflation. 2 and my own presidency has already seen the pandemic and economic lockdown, russia's brutal invasion of ukraine, the energy crisis and the return of too - high inflation. yet the fundamental promise of the euro has held true. and thanks in no small part to our monetary union, we have been able to weather it all – and come out just a bit stronger each and every time. first, the euro has brought us stability. with stable exchange rates, the single market – and the commitment to peace it represents – has not only survived ; it has thrived. one can only imagine how tempting protectionism would have been if the possibility of competitive devaluations had not been eradicated. the euro has also shielded us from external shocks. soon after its launch, it quickly established itself as the world's second reserve and invoicing currency. as a result, the price of more than half of what we trade is now denominated in euro, and for the other half, the single currency has helped insulate the economy from excessive exchange rate volatility. 3 as an illustration, ecb staff estimates suggest that, had the euro not been introduced, the depreciation of some euro area countries'currencies against the us dollar could have been up to 14 % larger during the global financial crisis and up to 10 % larger during the pandemic. 4 2 / 5