Christine Lagarde, the new President of Europe’s central bank was heard for the first time in her new role, by Members of the Committee on Economic and Monetary Affairs (ECON) of the European Parliament, on Monday.
Lagarde was nominated by the European Council to succeed Mario Draghi as ECB President, on 1 November.
The recently appointed ECB President said during her hearing that she is “trying to learn central bank language in order to not disappoint some of those who believe that any word is actually charged with 100 years of monetary policy determination”.
Lagarde highlighted that the institution’s last strategy review was conducted 16 years ago, while since then, major changes have taken place across the EU, including the Great Financial crisis in 2008.
The former IMF chief noted ECB’s poorly dynamic recovery after the crisis and the need to focus on connecting with the people ECB serves, by improving the ways in which the institution communicates with the general public. To this end, Lagarde stressed the Parliament’s role to ensure that the people’s voice is heard by the ECB and the ECB’s voice is heard by the people.
Among the topics discussed were the next steps for the ECB’s monetary policy, including the decision-making process on rates setting, while MEPs asked about inflation forecasts, the limits to the asset purchase programme and the prospects for the Eurozone budget.
Concerning stablecoins, the new class of cryptocurrencies that attempts to offer price stability and which are backed by a reserve asset, Lagarde highlighted that they could disrupt the current payments landscape, with spillover effects for monetary policy transmission and financial stability and that the EU should focus on consumer protection when it comes to digital currencies.
“Our ultimate goal is to foster safer, innovative and integrated payments in euro. This will in turn benefit everyone in the euro area and it will strengthen the euro internationally as well”, said Lagarde.
To make innovations beneficial, the French President of ECB suggested the mitigation of risks through effective regulation and oversight. “I believe that we should follow the golden rule of supervision in that matter: same business, same risk, same rules”, said Lagarde.
To the many MEP questions that asked for ECB’s response to the threat of climate change, Lagarde pointed out that the climate issue, while secondary to protecting price stability, would be included in the ECB’s macroeconomic models and taken into account when assessing risks and supervising EU banks.