Interaction between Monetary and Fiscal Policy – 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 fire chat discussion on the “Interaction between Monetary and Fiscal Policy”. We are greatly honoured to have speakers such Mr. Nikos Magginas, Chief Economist, Head of Economic Analysis Department, National Bank of Greece and Mr. Konstantinos Gravas, PhD, Global Political Economy and Monetary History & Lecturer, Department of Economics, Athens University of Economics and Business (academic years 2022 –2024).
Mr. Magginas highlighted the effectiveness of monetary policy in recent crises. He noted that interest rate hikes, combined with a surplus of deposits and declining non-performing loans, are paving the way for a return to normalcy in the economy and boosting the profitability of banks. He further underlined the need for Europe to invest in the credibility of its financial system and act more swiftly to seize opportunities, such as the Recovery and Resilience Facility.
In closing, both speakers underscored the importance of Europe’s strategic autonomy, its enhanced geopolitical role, and, by extension, the attractiveness of the euro as a global currency. They also encouraged the young audience to adopt an approach that emphasizes continuous education, innovation, finding work that provides moral satisfaction, and dedication—key elements for fostering development, prosperity, and the creation of resilient economies.
The discussion between Mr. Nikos Magginas and Mr. Konstantinos Gravas highlighted the complex relationship between monetary and fiscal policy, pointing out that monetary policy, designed by central banks, and fiscal policy, implemented by governments, should ideally work in harmony to promote stability and economic growth. They also explored the challenges and opportunities that arise during times of crisis.
Mr. Gravas stressed that fiscal prudence is a prerequisite for effective monetary policy. He provided examples from the Eurozone, where the ECB played a pivotal role in market stabilization through quantitative easing programs, which helped protect vulnerable economies and alleviate fiscal pressures. He also emphasized on the importance of avoiding fiscal dominance, which could undermine the ECB’s independence, and advocated for European fiscal integration as a key condition for safeguarding the economy against future challenges.
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