This can be expressed as the central bank having responsibility for price stability, but, just as much, it is a matter of ensuring that there is an efficient payment system in the country. As I said, there is an international debate on the importance of being able to cut policy rates to far below zero, and it is being discussed how this could be achieved in practice with various technical solutions. 12  See, for example, Rogoff (2020). 13 See, for example, Brunnermeier and Koby (2018). 9 [13]  Something possibly missing from this discussion is how the general public’s confidence in their country’s own currency/means of payment would be affected. If one unit of saved currency suddenly gives less than one unit of currency back, what would happen to the public’s willingness to hold that currency? Negative real interest rates are certainly nothing new, and this phenomenon has not been linked to any undesired effects on behaviour. Consequently, according to economic theory, negative nominal interest rates should not be any different as it usually assumes that it is real interest rates that are important to our decisions to consume or invest. However, this assumption is not undisputed, and there are plenty of examples to indicate that people often think in nominal terms.
Thus the degree of monetary policy activism can be different; this, however, is not on account of a different decision-making strategy, but on account of the different nature of the shocks impacting on the two areas. Comparative analyses show that the macroeconomic shocks on both sides of the Atlantic, 2 while of similar magnitude, appear to be partially different in their nature. Over the past ten  2  See, for instance, Smets, F. and R. Wouters (2005), “Comparing Shocks and Frictions in US and Euro Area Business Cycles: a Bayesian DSGE Approach”, in Journal of Applied Econometrics, Vol. 20, No 2, pp. 161-  2  BIS Review 135/2008  years the euro area has been worse hit by “supply shocks” than the United States. A supply shock tends to have an effect on growth with the opposite sign to that of inflation. One example is the decline in total factor productivity (TFP) in the early part of this decade which brought upward pressure to bear on inflation at a time when economic activity was slowing down, as occurred following the bursting of the dot.com bubble. Indeed, available evidence seems to suggest that the exacerbation of negative supply shocks is a recurring feature of economic slowdown phases in the euro area. As a result of that phenomenon, inflation in the euro area tends to react to an economic slowdown less rapidly than it does in the United States.