In my view, a consideration of the costs and benefits, and the opportunities and risks of a broad purchase programme of government bonds does not give a positive outcome at the current time. Concluding remarks Owing to my position, I have limited myself today to talking about innovations in monetary policy. At this point we should look first at the effect of our recent measures and of the asset quality review and the stress test on bank lending. Innovations in other political areas are also necessary, if not even more so. The reasons for weak growth and funding shortfalls primarily lie elsewhere, not in a lack of central bank liquidity, to say nothing of capital markets. Innovative political approaches are called for when it comes to increasing growth potential in the euro area, strengthening economic adjustment efforts and making budget consolidation compatible with growth and employment. But let me conclude by returning to the original question: how innovative may the ECB’s monetary policy be? As innovative as necessary and as effective as possible. This requires careful consideration. The risks and side effects must always be taken into account. For me, given the current situation, the hurdles for further measures are very high, especially for broad purchase programmes. The interest and spreads for many debt instruments are already very low: the risk of market distortions cannot be dismissed.
Short-term developments are not key, especially when they are largely determined by energy and food prices. The underlying trend and the firm anchoring of inflation expectations are decisive, as well as the orientation of the euro area as a whole. Low inflation rates in some Member States – even when negative – are not in themselves a breach of the target. They can be necessary to restore lost competitiveness. One could also argue about whether it is really necessary to consider further measures given that the measures already taken have not yet been able to have an effect. Monetary policy does not take effect immediately, but only with a certain time lag. As a rule we should take this time and wait and see. Which measures are we talking about here? The large-scale purchase of securities, including government bonds, is often seen as a panacea. As I said, even for innovative or unconventional measures, the costs and benefits, and the opportunities and risks must be carefully considered. Some central banks have used quantitative easing to quickly and decisively provide monetary policy impetus, adjusted to the specificities of their environment. It is these particular central banks and their measures to which we are compared. For me, these are idle comparisons. The following saying applies here: those who constantly compare themselves with others might become more like them, but they won’t necessarily become any better.