Information technology  My second worry is about the broad area of information technology – and this has really a couple of dimensions to it. The first is legacy: that most firms still have so much “clean-up” to do to fix longstanding technology and data issues that have built up over the years: systems don’t talk with one another; data aggregation takes days or weeks, when the needs are really more immediate; and data quality isn’t what it needs to be. So, there is still a significant amount of basic blocking and tackling that needs to be done. The second dimension that concerns me is the competitive landscape for financial institutions in the digital world. As more and more non-financial entities are entering the financial arena, like Amazon, Apple, peer to peer lenders, and others, I worry that financial firms lack the agility and ability to compete at the level that they need to – particularly with the constraints of regulation. At the end of the day, will financial firms be able to compete in the same way – or will these largely unregulated players be the future of our financial system? The final dimension I’m certain won’t surprise you – and that’s cybersecurity. I’m sure I don’t have to explain too much why this keeps me awake at night, but suffice it to say that as I think about the kinds of risks that might cause the next crisis, cybersecurity is the one that worries me the most.
Once the appropriate level of the key interest rates has been set, the Executive Board of the ECB implements its monetary policy stance so that the effects of its interest rate decisions are transmitted to the financial markets and the real economy effectively. In this sense, the ECB had to act swiftly and decisively to avoid that tensions in the money market would spill-over to other markets and adversely affect the real economy. So we had to clearly convey two complementary messages. One was that the ECB was determined – from the onset of the financial crises in August 2007 – to ensure the orderly functioning of the euro area inter-bank money market by offering supplementary liquidityproviding refinancing operations or – more recently – by widening the collateral framework to facilitate the provision of liquidity to merchant banks and to engage in unlimited provision of liquidity for all our refinancing operations at a fixed rate. The other message which is fundamental was to raise the public’s awareness that the exceptional interventions aimed to alleviate the tensions in the money market would not compromise the longer-term achievement of price stability in line with our definition less than 2%, but close to 2%. Conclusions Let me conclude. The fundamental changes in central bank communication have helped to enhance the effectiveness, predictability and credibility of monetary policy and have notably contributed to lowering both inflation rates and volatility in the real economy.