The ECB is ready to play its part and is already collaborating with other central banks and international authorities to that end. We are also reviewing our oversight framework to capture innovative payment solutions, including stablecoin arrangements. In doing so, we are following a risk-based and proportionate approach. Looking ahead, the ECB will continue to act as a catalyst for change. We will go on engaging with European stakeholders to actively contribute to a pan-European payment solution. We also play our part, in full independence, in assessing the value of central bank digital currencies for European citizens and the broader economy. A central bank digital currency would allow citizens to use central bank money directly in their daily transactions. However, depending on its design, a central bank digital currency could pose risks. For instance, they could alter the way in which monetary policy is conducted and transmitted to the real economy. They could also carry implications for the functioning of the global financial system and its stability. The question of central bank digital currencies and their optimal design therefore warrants further analysis. Our ultimate goal is to foster safer, innovative and integrated payments in euro. This will in turn benefit everyone in the euro area and strengthen the euro internationally. Conclusion Madam Chair, honourable members, The last European Parliament elections highlighted that people expect ambitious responses from Europe.
This implies that we will continue to exert downward pressure on the yield curve by keeping our stock of asset holdings at a high level for a prolonged period of time, and we could specify it in our communication. 2/ Perhaps the most unconventional policy tool is the use of negative interest rates. Negative interest rates have their limitations; I have already stressed them in the past.vii And at our Governing Council’s meeting in Tallinn last June, we clarified these limitations in our forward guidance stating that we do not intend to lower our deposit facility rate below its current level of -0.40%. But slightly negative interest rates have their virtues. First, by removing the zero lower bound constraint on expectations of future short-term interest rates, they contribute to easing financial conditions by lowering rates along the curve, with a positive impact on the demand for credit by firms. Second, the negative deposit facility rate (DFR) positively interacts with asset purchases. Indeed, the portfolio rebalancing effect of QE is reinforced by the negative DFR, as banks with excess liquidity holdings have a stronger incentive to put their reserves to work. And, so far, we have not seen significantly detrimental effects of negative rates on the profitability of banks, notably thanks to the favourable fact that the slope of the yield curve has remained positive. 3/ Our forward guidance provides further indications as to the future path of our monetary policy; and by steering expectations, it has an impact on the yield curve.