Lagarde: On your question concerning CBDC, you know my views on CBDC and you know that I have pushed that project. Fabio Panetta is working hard on that together with members in the entire Eurosystem with the high-level taskforce that is working really hard on moving forward. But in a way, I am really pleased that attention is now focussed on the role that cryptos can play and the role that Central Bank Digital Currency can have when they are implemented. We have a schedule, as you know. The Governing Council decided back in October '21 to launch a two-year investigation phase, and it is at the end of that investigation phase that the decision will definitely be made to launch the CBDCs and to make it a reality. We can't go wrong with that project. I am confident that we will move ahead, but that's going to be a decision of the Governing Council. I think it's an imperative to respond to what the Europeans expect, and I think we have to be a little bit ahead of the curve if we can on that front.
If we can accelerate the work, I hope we can accelerate the work. I will certainly support that and I was delighted to see that in the United States there was an executive order by President Biden to actually expect similar effort and focus and progress on CBDC, cryptos. I think that it will take all the goodwill of those who want to support sovereignty, who want to make sure that monetary policy can be transmitted properly using our currency, will endeavour.
On the issue of financial stability, I totally concur with my Vice-President de Guindos, but I will also point you to the last sentence in the first paragraph of our monetary policy statement. I know that there has been an abuse of that, but we mean it. We will take whatever action is needed to fulfil the ECB's mandate to pursue price stability and to safeguard financial stability. So have no doubt!
#Lagarde #ECB #Russia #Ukraine #Energy #inflation
Christine Lagarde, ECB president, said Russia’s invasion of Ukraine had created “a major shock” for the eurozone economy, adding that the central bank was forecasting higher inflation and lower growth over the next three years.
Setting out a quicker reduction in its bond-buying plans this year, the ECB said it would reduce asset purchases to €40bn in April, €30bn in May and €20bn in June. Its earlier plan was to steadily reduce net purchases from €40bn a month in April to €20bn a month from October.
It could stop adding to its existing €4.6tn bond portfolio in the third quarter “if the incoming data support the expectation that the medium-term inflation outlook will not weaken even after the end of our net asset purchases”.
The separate €1.85tn emergency bond-buying scheme launched in response to the coronavirus pandemic would stop net purchases as planned at the end of March, it said.
However, the central bank dropped a commitment to end asset purchases “shortly before” it raises interest rates, saying instead that any change to rates would be “gradual” and come “some time” after asset purchases end, which Lagarde said could mean months, or a week later.
The war in Ukraine has prompted some economists to warn about the risk of stagflation, in which a supply-side inflationary shock is combined with stagnant growth. This leaves the ECB in a difficult position, torn between the desire to tackle inflation that is expected to stay well above its 2 per cent target until at least next year and wanting to support the economy.
The ECB cut its growth forecast for this year to 3.7 per cent, down from 4.2 per cent, and Lagarde said high inflation could put more downward pressure on demand. It raised its forecast for inflation this year from 3.2 per cent to 5.1 per cent. But crucially it predicted inflation would fade to 2.1 per cent next year and 1.9 per cent in 2024 — meaning it still has not fulfilled a key condition to raise interest rates.
“Inflation could be considerably higher in the near term,” Lagarde said. “However, in all scenarios, inflation is expected to stabilise around our target by 2024.”
Only last month, the ECB governing council agreed it could speed up a “gradual normalisation” of its ultra-loose monetary policy. But the invasion of Ukraine and the sanctions imposed on Russia threw this plan into doubt after economists slashed their growth forecasts and predicted inflation would surge from the record level of 5.8 per cent reached in February.
#Lagarde #ECB #Russia #Ukraine #Energy #inflation
Christine Lagarde, ECB president, said Russia’s invasion of Ukraine had created “a major shock” for the eurozone economy, adding that the central bank was forecasting higher inflation and lower growth over the next three years.
[ Ссылка ] #eudebates
