If the distance between the steady state nominal rate and zero is small, there is not much scope for cutting rates to defend price stability in the face of a negative shock.
A vision that can stabilise expectations needs to address not just tomorrow, but also the day after tomorrow. And as it takes time to implement such a vision, we must start thinking about it today. It is my firm conviction that the Europe of the day after tomorrow will be of an original type – a new type of institutional framework.