Luis M Linde: The European and Spanish economic situation Opening address by Mr Luis M Linde, Governor of the Bank of Spain, at the Annual Economists’ Forum/Consejo General de Economistas, Madrid, 29 May 2014. *  *  *  I much appreciate the invitation to participate in this forum and the opportunity to share with you some brief thoughts on the European and Spanish economic situation. Following six quarters of negative growth, the euro area economy initiated a mild recovery in 2013 which has since continued. The recovery is essentially being underpinned by the gradual pick-up in domestic demand, after the strong adjustment it underwent during the recession. However, the latest GDP growth figure, for the first quarter of this year, illustrates the stillfragile and uneven nature of this economic improvement in the euro area. According to the provisional estimate released by Eurostat, the increase in activity in the euro area as a whole in 2014 Q1 was 0.2% in quarter-on-quarter terms, below most analysts’ expectations. Note that this rate has been affected by exceptional temporary factors in some countries. In any event, the mixed nature of the recovery is evident if we compare the strong momentum the German economy is providing to the area as a whole with the behaviour of activity in other countries such as France, where it is practically flat, or others still such as Italy, the Netherlands, Portugal and Finland, where negative figures have been posted.
The survival of the national currency and its acceptability to the public will continue to depend on the central bank carrying out a responsible monetary policy which protects the value of the currency. Discharge of this duty should not be materially affected or impeded by technological developments in payment methods. The central bank’s ability to influence interest rates or the exchange rate through its market operations will not be diminished. I conclude that, all in all, there are few concerns for the central bank in its monetary policy role that arise from the development of e-commerce; where there is an impact it is likely to be gradual and central banks should be able to adapt to it as readily as they have to other structural changes in the financial sector over the years. For the reasons discussed earlier, however, the challenge to the banking regulatory side of the central bank is likely to be rather greater. BIS Review 28/2000  4