Local view for "http://purl.org/linkedpolitics/eu/plenary/2003-07-03-Speech-4-018"
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"en.20030703.1.4-018"2
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".
Mr President, first of all let me thank all the Members that have spoken for their good wishes and in particular for their encouragement to the ECB to strictly adhere to the Stability and Growth Pact.
Is the definition of price stability too rigid? I do not believe so. We recently clarified our definition and our strategy. We are striving for a rate of inflation of below 2% but also close to 2%. That should be a guarantee to the European people that we are on our guard, not only to fight inflation, but also to fight deflation if it were to emerge.
Let me answer another question clearly. Mr Santos wondered whether there was a danger that the appreciation of the euro might lead us into a deflationary environment. The answer is that we do not see that. We do not expect deflation, not in Europe and not in individual component parts of the euro area. Deflation is not around the corner. That is clear.
Is the definition too rigid? Let me speak anecdotally. We define our price stability as a rate of inflation of no more than 2%. Let me remind you and give an example. The Bank of England has inflation targeting, and the Chancellor imposes a target on the Bank of England of 2.5% inflation, 2.5% inflation as measured by the retail price index. Now the Chancellor has announced that probably in September, when he presents his mid-year budget, he will change the definition of the price index into the European one
the harmonised index of consumer price inflation. When he does so, the implication is that the 2.5% in England will translate into less than 2%
probably between 1.75% and 2%
in terms of the harmonised index of consumer prices.
On publishing the minutes and being more transparent, I truly believe that there is no central bank in the world which is as transparent about its monetary policy decisions and the backgrounds and analyses leading up to decisions as the European Central Bank. About an hour after a decision has been taken, we hold a press conference and give all the necessary background and explanations which led us to take that decision and subsequently, in a question-and-answer session, we answer all the questions relating to it.
Some say that if the minutes of those meetings were published there would be less confusion. May I refer to the decision taken last week by the Federal Reserve System, which immediately produced a press communiqué giving the decisions and stating how the members of the Federal Open Market Committee had voted. You all know now that has created more confusion than transparency in the markets.
Mr President, I have answered the most pressing questions. I would like to thank the Members once again for their good wishes, both for the past and for my future. I should like to say to Mr Karas, who has a three-year-old son, that I have eight grandchildren of about the same age. They saw me recently on a television programme for children explaining the functioning of the euro and its intricacies. They called me after the television interview and I asked them if they had understood what I said. Their answer was: 'Why? What's so special about the euro? We don't know anything else! What was there to explain?' I regard that as one of the greatest successes of the introduction of the euro, that at least for my grandchildren it is nothing special any more. It is simply their money.
One has to realise that the Stability and Growth Pact is a very welcome additional element in forging our monetary policy. However, the ECB is not the guardian of the Stablility and Growth Pact; that is the European Commission. I can assure you, however, that the ECB has been and always will be squarely behind the European Commission in its endeavours to live up to the conditions of the Stability and Growth Pact.
Mr Andria has referred to the position of the ECB and the ESCB as mentioned in Article 29 of the draft Constitution of the Convention, which will be under discussion in the Intergovernmental Conference as from the middle of October. May I add one remark? In general the ECB welcomes the draft Constitution in so far as its position is concerned. However, we have one overriding wish for change, concerning the fact that in the current Treaty and in the draft Constitution, the term European System of Central Banks is interpreted with some ambiguity. Sometimes it is to be understood that it refers to the total of all the central banks participating in the European System of Central Banks. Sometimes it is understood as comprising only the ECB itself and the participating national central banks. We have pleaded for the inclusion of a reference somewhere to the core concept of Europe's system of central banks, that is, the Eurosystem. It is the ECB that is the hub, the participating national central banks are the spokes; together they form the central banking system of Europe.
We will, when we are asked for an opinion, and we have to be asked for our opinion, urge the Intergovernmental Conference to make a reference somewhere in the text to this concept of the Eurosystem, which is the central bank of the European people, something which up until now has not been mentioned, either in the current Treaty or in the draft Constitution.
Various speakers
Mrs Randzio-Plath and also others
have expressed some doubts as to whether the current monetary policy stance is optimal. The last speaker, Mr Langen, even referred to statements made in recent days by some heads of government
Mr Schroeder, Mr Raffarin, and Mr Berlusconi
calling on the ECB to do more to promote growth in the current circumstances.
Let me be crystal clear on that. The current monetary policy stance, in the eyes of the Governing Council, with interest rates at 2%, is regarded as being appropriate in the light of the developments we foresee for the medium-term future.
We expect inflation for the remaining months of this year to hover around this level of 2%, then early next year, mainly due to base effects, to fall significantly below the 2% limit and then, later on next year and in 2005, to climb back somewhat in a direction that will bring it close to 2%. That is our aim.
Given this monetary policy stance, which is regarded as appropriate in the light of analysis of the future, in so far as we can make it, one can conclude that monetary policy has played its part in creating the conditions for a resumption of economic growth and growth of employment in the euro area.
We have played our part and it is now the case that governments
maybe I sound a little sharp
can no longer hide behind the ECB to try to cover up their failure to enact the structural reforms which are so urgently required for Europe."@en1
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