This means that more and more forms of activity will be generated by international optimisation of business processes. This in turn will force individual countries/regions to increase their attractiveness for the global business, which requires an active attitude of local selfgovernments. For instance, Dubai Outsource Zone is a government initiative, aimed to make Dubai a highly attractive international off-shoring/outsourcing centre. The concept of multi-off-shoring appears, where a decision on globalization of manufacturing entails starting business activity (routing orders) in several locations. There is a lot being said and written on the impact of globalization on the US economy, but there is a lot going on across Europe as well. Off-shoring of manufacturing and services to other countries is not the key reason for restructuring yet; however its significance grows year by year. The European Restructuring Monitor 15 website, at the end of 2005, contained a description of ca. 3500 cases of company restructuring in Europe, which has been announced in the media (international and national) since 2002. In the years 2002 - 2005 there were only 202 cases of company restructuring (i.e. 6% of total) which, as their main reason, reported the transfer of manufacturing or service abroad (that is colloquially called off-shoring), whereas in 47% the reason was internal restructuring, which could have partly resulted from the growing competitive pressure ensuing from globalization. The EU enlargement in 2004 led to significant changes in the off-shoring process across Europe.
Does that imply that the current stance is appropriate, if your staff forecasts are confirmed? Yes. And if there is a further deterioration, then we will react. But for now, our monetary policy stance is fully compatible with both inflation and real activity. The important element is that we are totally ready to react. And I would add another element, if I may: risks are tilted to the downside. Do you mean, in terms of real activity? Both in terms of real activity and in terms of inflation. So if those risks materialise, then we will react. Can you think about different monetary policy tools to address different problems? If the issue is with the exchange rate, official rates are probably the answer; if it’s real activity, then QE; if it’s monetary transmission, then it’s targeted longer-term refinancing operations (TLTRO)… We do not allocate our instruments to different objectives. Something that I think is relevant, but is sometimes a bit overlooked, is that monetary policy is not almighty. If there is a problem with price stability, that’s within our mandate. But this is something everyone has to keep in mind to avoid creating expectations that will not be met: we do not have the philosopher’s stone. Are you implying that having something of a policy mix would be good, in total respect of the ECB’s independence? Sure.