Christine LAGARDE, President of the European Central Bank is heard, for the first time in her new role, by Members of the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels. MEPs discuss with her the economic perspectives of the euro area and next steps for the ECB’s monetary policy, including the decision-making process on rates setting.

Monetary Dialogue with Christine LAGARDE, President of the European Central Bank: extracts from the exchange of views

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Title: Monetary Dialogue with Christine LAGARDE, President of the European Central Bank: extracts from the exchange of views (I-181106)

Arrival of Christine LAGARDE, President of the European Central Bank (3 shots)

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank, Trust in the custodians of the Euro, that is the ECB has also grown up, but certainly not in the same magnitude as it has for the Euro, it has been less dynamic My predecessors at the ECB were very attentive to that and already acted acted to address the challenge.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank, It is important to me that our focus on connecting with the people of the euro area, those we serve, continues and grows stronger, in particular by improving the ways in which we communicate with the general public.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank, In our case, the ECB&rsquo;s has last conducting strategy review in 2003. That is 16 years ago. In these 16 years many things have happened. The macroeconomic landscape has been marked by the Great Financial Crisis in 2008 and then the sovereign debt crisis that triggered here in Europe in 2011. More recently that landscape has been affected by low inflation, pretty much around the world and certainly in the advanced economies. At the same time, new challenges hare taking place from demographic changes, aging of societies, predominant in the advanced economies, but also massive technological changes and breakthroughs, especially when compounded, and climate change has finally reached the mainstream debate and is hitting the screen of everyone is interested in the future and has policy responsibilities.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank, The ongoing discussion around so-called stablecoins offers a glimpse of the changes that are yet to come. This phenomenon could disrupt the current payments landscape, with spillover effects for monetary policy transmission, financial stability and the international monetary system more broadly. But I can ensure you that the ECB is not standing still.

SOUNDBITE (English), Christine LAGARDE, President of the European Central Bank, Since 2016, the ECB has also been exploring the application of new technologies, particularly the famous DLT, Distributed Ledger Technologies, to market infrastructures. Together with the Bank of Japan, the ECB is conducting a research project called &ldquo;Stella&rdquo; which is investigating innovations that can facilitate safer, faster and cheaper financial transactions. But driving change also means identifying and managing the risks that come with breaking new grounds. Innovations &ndash; including stablecoins &ndash; will only be beneficial if the associated risks are mitigated through effective regulation (that is why you come into place) and oversight. So I believe that we should follow the golden rule of supervision in that matter: &ldquo;same business, same risk, same rules&rdquo;.

SOUNDBITE (English), Christine LAGARDE, President of the ECB, We are also reviewing our oversight framework to capture innovative payment solutions, including stablecoins arrangements. In doing so, we are following a risk-based and proportionate approach. Looking ahead, the ECB will continue to act as a catalyst for change. We will go on engaging with European stakeholders to actively contribute to a pan-European payment solution.

SOUNDBITE (English), Christine LAGARDE, President of the ECB, A central bank digital currency would allow citizens to use central bank money in their daily transactions. However, depending on its design, a central bank digital currency could pose risks. For instance, they could alter the way in which monetary policy is conducted and transmitted in the real economy. They could also carry implications for the functioning of the global financial system and its stability. So the question of central bank digital currencies and their optimal design certainly warrants further analysis. Our ultimate goal is to foster safer, innovative and integrated payments in euro. This will in turn benefit everyone in the euro area and it will strengthen the euro internationally as well.

Monetary Dialogue with Christine LAGARDE, President of the European Central Bank: extracts from the exchange of views

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