Christine Lagarde: Remarks on the occasion of receiving the Grand Prix de l’Économie 2019 from Les Echos

SPEECH

Remarks on the occasion of receiving the Grand Prix de l’Économie 2019 from Les Echos

Speech by Christine Lagarde, President of the ECB, at the "Grand Prix de l’Économie des Echos pour l’année 2019"

• In particular, two big ambitions are pervading many aspects of policymaking in ways that create change, but also opportunity:
  • the goal to build real “European autonomy”;
  • and the aim to urgently fight the consequences of climate change.
  • The environment facing European business today is characterised by both uncertainty in the short term and a changing landscape in the longer term.
  • The short-term uncertainties are mainly related to global risks trade, geopolitical and now the outbreak of the coronavirus and its potential effect on global growth.
  • And, though GDP growth in the last quarter was weak, it was broadly in line with our expectations.
  • So were continuing to monitor closely how these risks develop and how they feed into our central scenario for the economy.
  • I know that, as business leaders, you naturally seek the new opportunities that emerge for your companies in such times.

European autonomy

• So its no surprise that the ambition of building European autonomy is gaining traction and has been gathering momentum in various policy areas.
• Where this overlaps most with the ECB is the international role of the euro.
• It strengthens monetary policy autonomy.
• [1] Of course, autonomy should be seen not as an alternative but as a robust complement to global cooperation, which is of utmost importance.
• But in Europes case, while the international use of the euro has stabilised in recent years, it still lags some way behind the dollar, even for European trade.
• So, European policymakers are showing renewed interest in strengthening the euros global role and this coincides with the ECBs tasks.
• And here the ECB can contribute, in particular by providing safe and innovative market infrastructures under European jurisdiction, and by acting as an accelerator in payments solutions.
• As forthcoming analysis from the European Systemic Risk Board shows, there are plausible channels through which a cyber attack could morph into a serious financial crisis.
• So the ECB is well aware that it has a duty to be prepared and to act pre-emptively.

Climate change

• The second big ambition reshaping the landscape for business is the mission to fight the consequences of climate change.
• In keeping with this, climate change will be a key part of our ongoing strategy review.
• We need to extend our knowledge about the macroeconomic effects of climate change, in particular in key areas like inflation, productivity and trade.
• A recent study found that, out of approximately 77,000 articles published in top economics journals, less than 60 have been on climate change.
• What we do know so far suggests that climate change will affect monetary policy.
• In other words, bringing climate change more fundamentally into our analysis and strategy is not mission creep: climate change is also a price stability risk.
• These include physical risks from natural disasters and climate change, and they include risks from a disorderly climate transition.

Conclusion