Keynote Speeches – 8th ECB Simulation Conference
The Training Day serves as the inaugural day of the annual ECB Simulation Conference for university students, where distinguished representatives from institutions, businesses, and academia share their knowledge and experiences with the participants.
The Training Day for the 8th Conference took place at the Bank of Greece on November 22, 2024.
The key themes of the Conference were:
- Monetary Policy: The interaction with Fiscal Policy, the risk of fragmentation, and the challenges of effectiveness in a permacrisis environment.
- Climate Change and the transformation of the financial system in the field of ESG.
- Digital Euro: The impact on the payments landscape and financial stability.
The 8th Conference was made possible thanks to the invaluable support of the Bank of Greece, the Hellenic Bank Association, Alpha Bank, PwC Greece, the National Bank of Greece, and the Athens University of Economics and Business.
Here, we highlight the positions of the speakers during the Keynote speeches. We are greatly honoured to have speakers such Mr. Christos Hadjiemmanuil, Professor, University of Piraeus, Visiting Professor, London School of Economics & Member of the Monetary Policy Council, Bank of Greece, Ronan Sheridan, Deputy Head, Public Communications Department, European Central Bank and Mrs. Ifigeneia Skotida, Deputy Director, Economic Analysis & Research Department, Bank of Greece.
Next speaker was Mr. Ronan Sheridan, who elaborated on the role of communication in enhancing the effectiveness of the ECB monetary policy. He specifically highlighted trust and credibility as the cornerstones of the ECB’s operation, emphasizing that the ECB does not address individual states but all member states collectively, with their diverse cultures and languages. He stressed the importance of avoiding overly technical language and terminology to ensure that the ECB’s messages are accessible and easily understood by the broader public, without requiring prior knowledge.
Mr. Sheridan then drew attention to the method of delivering messages and engaging with the public, underlining the necessity of using clear and simple language. He showcased the example of the “Monetary Policy in Simple Terms” initiative, which simplifies key messages, incorporates visual aids, and is distributed in all official languages of the Eurozone.
Additionally, Mr. Sheridan addressed the challenges the ECB faces in bridging the trust gap with the public, which has persisted since the global financial crisis. He emphasized the importance of utilizing modern communication channels, such as social media, to reach younger generations and enhance the ECB’s digital presence. He concluded by stating that communication must remain at the heart of the ECB’s efforts to ensure stability and maintain public trust.
The keynote speeches began with Ms. Ifigeneia Skotida, who, in her central address, presented the challenges of inflation and monetary policy in the Eurozone. She started by analyzing the emerging challenges of recent years, focusing on supply disruptions that triggered inflation surging to historic highs. Exogenous shocks, such as the pandemic and the war in Ukraine, created trade restrictions, skyrocketed energy prices, and increased the cost of living, thereby placing central banks in the unprecedented position of tackling historically high inflation levels both within and beyond the Eurozone.
Ms. Skotida went on to explain the decisive actions taken by the European Central Bank (ECB) to combat inflationary pressures. These actions included significant interest rate hikes and gradual adjustments to its balance sheet, all aimed at price stabilization. She particularly highlighted the achievement of a general de-escalation in prices, with inflation now nearing the desired target. Through close coordination with the Governing Council, the ECB leveraged the monetary policy transmission mechanism, implementing stringent measures to mitigate the impact on inflation expectations.
She further emphasized the ECB’s commitment to preventing financial fragmentation through the use of various tools. Ms. Skotida underlined the need for complementary structural and fiscal reforms to enhance productivity, resilience, and economic competitiveness. Concluding her speech, she reassured that the ECB remains steadfast in its commitment to price stability while also contributing—reasonably—to economic growth. Acting as an anchor of trust, the ECB adjusts its policies with flexibility to address future challenges effectively.
The keynote speeches concluded with Mr. Christos Chatziemmanouil, who analyzed the dynamic relationship between the digital euro and monetary policy, focusing on its role as a tool for modernizing the payment system and its implications for the European economy and banking sector. He explained that Central Bank Digital Currency (CBDC) represents a new form of legal tender and ledger-based money.
Specifically, he noted that the digital euro would function as an electronic payment instrument, complementary to cash, strengthening the strategic autonomy and transparency of the Eurozone. He emphasized its potential to reduce payment fragmentation, enhance e-commerce, and limit dependency on non-European third-party providers.
However, Mr. Chatziemmanouil also highlighted the risks posed to the banking system. He pointed to the potential loss of deposits from banking institutions, as funds held in digital wallets could restrict banks’ ability to provide loans. He also discussed scenarios of potential bank runs, which could destabilize the financial system. A digital euro without retention limits could enable the rapid transfer of large amounts of capital within minutes, potentially causing significant instability in the banking system.
Furthermore, he noted that not all countries agree on the necessity of developing the digital euro, with Austria and Germany expressing the strongest opposition. Finally, Mr. Chatziemmanouil stressed that the digital euro would not be used as a tool for monetary policy, as this could mislead the public and negatively influence market expectations, ultimately threatening the stability of the economic system.
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