06 May 2013

ECB/Mersch: The euro and the ECB – Perspectives and challenges ahead

Mersch began his speech with a tribute to the founding fathers – and founding mother – on the Executive Board of the ECB: "They have set us on the right course. The ECB, for its part, has delivered on what it has been asked to do."

The same cannot be said for other policy areas. Partly because of its success in establishing itself as a credible institution, the ECB has been in a position to step into the breach during the crisis as a guarantor of stability and is now being asked to shoulder additional responsibilities. As back then, when the first Board prepared for the launch of the euro, today the ECB is steering a course into uncharted territory. As it was back then, today we need to be guided by firm principles and a clear compass to serve as an anchor of stability.

Once again the Executive Board and the Governing Council need to be mindful about the limits of what can be asked of monetary policy, what can be asked of central banks and what must not be asked. This was a main theme of Mr Mersch's remarks on the perspectives and challenges that lie ahead for the ECB and the euro. Equally though, other policy areas need to be mindful – and be reminded – of their respective responsibilities for the stewardship of the euro.

15 years after the setting up of the ECB, there is a need to press on with the ongoing relaunch of the institutional underpinning to put the euro on a sounder footing. Such a relaunch should not put into question the achievement of the single monetary policy, the ECB’s clear and unequivocal mandate and the clear division of roles and responsibilities among different policy areas. In particular, a fully-fledged banking union, as complement to monetary union supports financial integration and monetary policy transmission and hence ultimately reduces the burden on monetary policy.

"At 15, the ECB, and the euro, are approaching adolescence. In the crisis the euro area had to grow up very quickly amidst daunting challenges to its identity, even its very existence. Further turbulence cannot be ruled out. But I am confident that the ECB, will do all that is needed for the euro to have a long and prosperous life. After very difficult years of adjustment and renewed institution building, the euro will stand on solid feet and emerge stronger, provided that all in the family of stakeholders live up to their respective responsibilities."

Full speech

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