policy is less effective when it comes to improving a country ’ s long - term growth potential. structural policies, institutions, research and development play more important roles in this context. but this is not to say that monetary policy is irrelevant for long - term growth. in fact, economic performance requires a growth - friendly environment. monetary policy contributes to such an environment by ensuring a reliable policy framework, a sound financial system, a well - functioning banking system, and macro - prudential policies that prevent excessive price fluctuations. finally, i do dare to confront this meeting of economists with a rather philosophical question – a question, however, that has already been asked by j. m. keynes and which is today being frequently repeated especially among young people : what about the connection between economic growth and human well - being? is there not an increasing need to look not only at the quantity but also at the quality of economic growth? this is a very broad field indeed, but questions like these may point to some aspects that also central bankers may have to take into immediate consideration. at the recent, highly interesting ecb forum on central banking in sintra, there was a discussion on structural reforms – which, as you know, is a mantra in all ecb statements. one of the eminent economists attending the conference asked what may be the human costs of certain forms of structural reform. so e. g. what forms of increased flexibility in the labor markets are really welfare improving and what forms of increased insecurity, involuntary mobility, reduced chances for family life may have long - lasting negative welfare – and may be also outright growth – effects? and i may add : would such a perspective lead to different priorities for policies that are intended to reduce unemployment? what does this mean for our standard concepts of potential output and a natural rate of unemployment, which the ecb by the way sees at 10 %, compared to 5 % in the u. s. a.? you may know the famous remark by george bernard shaw : “ economists know everything about prices and nothing about values. ” i trust that this will not be the motto of our meeting! this brings me to the end of my introductory remarks. to conclude, i look forward to having a day and a half with you to discuss these important issues of economic policy from a multitude of perspectives. i hope you will find our economics conference a useful and an insightful event. bis central bankers ’ speeches

had a calming effect on financial markets. the composite indicator of systemic stress ( ciss ) used by the ecb indicates that this policy response has averted a severe financial market crisis in the spring of 2020 ( figure 9 ). figure 9 indicator for systemic stress in financial markets ( ciss ). index https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp201216 _ 1 ~ 9caf7588cd. en. html 10 / 17 12 / 18 / 2020 the importance of trust for the ecb ’ s monetary policy source : ecb working paper no 1426. notes : ciss denotes the composite indicator of systemic stress ( 0 = no stress, 1 = high stress ). the indicator aggregates stress signals from money, bond, equity and foreign exchange markets. the latest observation is for 11 december 2020. the ecb ’ s crisis measures consist mainly of a new temporary asset purchase programme, tailored specifically to the pandemic crisis – the pandemic emergency purchase programme ( pepp ). in addition, the ecb provides ample liquidity to banks at highly favourable conditions, thus ensuring that they continue to lend to businesses and households in the euro area. the ecb ’ s crisis measures thus ensure the smooth transmission of our monetary policy measures to the entire euro area. the economic consequences of the pandemic have especially affected those countries that already had relatively high debt levels prior to the crisis and where confidence in the ecb was rather low. [ 21 ] at the beginning of the pandemic period, there was thus a concern that limited fiscal space in some euro area countries would significantly constrain the fiscal response to the crisis. these fears increased the risk of fragmentation in euro area financing conditions, which was immediately reflected in the evolution of risk premia in european bond markets. the ecb effectively countered this risk, in particular by swiftly implementing the pepp ( figure 10 ). figure 10 10 - year yield spreads of selected government bonds over german equivalents. basis points https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp201216 _ 1 ~ 9caf7588cd. en. html 11 / 17 12 / 18 / 2020 the importance of trust for the ecb ’ s monetary policy source : bloomberg. note : the latest observation is for 14 december 2020. complement