Relaunching investment, growth and leveraging EU savings: what role for monetary policy? 

Objectives

Objectives

This session will provide a high-level discussion among central bank governors and senior policymakers on the realistic role and limits of monetary policy in relaunching investment and growth in Europe, and on the effective mobilisation of savings, in a context of expected increased inflation following the war between the United States, Israel and Iran, high indebtedness and increased global uncertainty.

In particular, the discussion will seek to:

·        Take stock of where ECB monetary policy stands today and where it is headed over the coming year, including in terms of balance sheet policy.

·        Discuss the appropriate monetary policy stance in the context of  the recent energy price shock.

·        Examine the interaction between monetary policy, high levels of public debt and investment incentives, acknowledging the policy trade-offs faced by central banks while preserving the primacy of the price stability mandate.

·        Explore whether and how new forms of money, including the digital euro, could affect monetary policy transmission and investment financing, while recognising that structural reforms, fiscal policies and capital market integration remain essential complements.

The session will clarify what monetary policy can realistically achieve in the current environment, where its contribution should be clearly bounded, and how it can best interact with other policy levers to support sustainable investment and long-term growth in Europe.

Points of discussion

1. What are the current challenges for monetary policy? How central banks should react to the impact of the recent energy price shock?
2. To what extent do abundant liquidity, elevated indebtedness, increased global capital mobility and the rise of digital forms of money shape the effectiveness of monetary policy in mobilising European savings towards productive investment?
3. Generative AI is making incredible gains in terms of the frontier of what is possible technologically, and adoption has also been faster than that of any other general-purpose technology.  What are the implications for the economy and monetary policy?