Mojmír Hampl: The euro – the case of the European monetary integration project and its former hegemon Speech by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the Mont Pelerin Society Annual Conference, Prague, 4 September 2012. *  *  *  Many thanks to the organizers for their kind invitation – I’m really honoured to speak on such a distinguished panel. But excuse me first for making a small detour: the organizers forgot to mention in my CV that I also had the honour – together with a group of distinguished colleagues (some of whom are here today) – to help launch Laissez Faire here 14 years ago. This is a magazine devoted to the promotion of liberal/libertarian ideas in the Czech public domain (“liberal” not in the American sense of this word). Such libertarianism is rather unusual intellectual equipment for a poor central banker, especially in the current times. However, I very much believe it is an advantage, and many of the ideas mentioned in Laissez Faire are very much missing from normal European policy debates. What a shame. But back to the topic: What is the euro? As Barry Eichengreen demonstrated, it is a really unique animal, a unique monetary arrangement. I do not buy into many of Barry Eichengreen’s ideas, but I do agree with this particular statement. Why? Here is my definition of the euro.
Unemployment has been close to a low historical average. Although it is of course difficult to compare and assess different central banks’ deliberations, the repo-rate decisions in Sweden during most of 2013 would appear to be one of the clearest examples of a monetary policy that leaned against the wind. When the prospects for inflation fell, the repo rate was held unchanged with explicit reference to household debt. This makes it interesting both for us in Sweden and for central banks in other countries to assess how successful the policy has been. It is far too early to make a complete assessment. But as there is a substantial need to manage financial imbalances in some countries, and there is a discussion on the role of monetary policy in this context, it may nevertheless be useful to make a preliminary assessment of the policy. Swedish inflation moving further from the target CPIF inflation was around 2 per cent in 2010, when the increases in the repo rate began after the record-high cuts in connection with the global financial crisis. But since then inflation has fallen and CPIF inflation has been around 1 per cent for a couple of years. Last autumn, inflation fell further. It is now very low; in February CPI inflation was –0.2 per cent and CPIF inflation was +0.4 per cent.