 De House of Representatives met Mr Draghi, president of the European Central Bank. This meeting is an initiative proposal by Arnold Merkis, former member of the Parliament of Socialist Party and fully supported by the whole finance committee. A warm welcome to you, Mr Draghi. A warm welcome to your support staff. Dank je voor accepteerd dit invoeting. De orde van de meeting is dat de orde van 1 tot 3 uur klokt. De orde zal er als volg van zijn. Eerst zal Mr Draghi een introductiestakel van 10 tot 15 minuten maken. We hebben een discussie over 3 topical blokken, die worden bepaald door de selectie van de membouwen van de parlementen. De 3 topical blokken zijn vragen over de necessiteit van de monetarische politie van de ECB. Dat zal gereden worden door Mr Van Dijk en Ms Schouten. De 2e blokken zijn over de effecten van onwantige zee-effects en de risico's van de monetarische politie van de ECB. Dat blokken zal gereden worden door Mr Harbers, Mr Van Wijenberg en Mr Snells. De 3e blokken zijn over de institutionele positie en de mandate van de ECB over de monetarische politie. Dat blokken zal gereden worden door Mr Omtzigt en Ms Leiten. Ik heb een aantal van de namen gegeven. De andere membouwen, en we hebben een soort van een aandrijving gemaakt met elkaar als de Financie Commissie, er zal veel mogelijkheid zijn voor alle membouwen om vragen te vragen. Dus dat zal zichzelf zorgen. Dat is eigenlijk de aandrijving. Dan de eerste deel van de agenda. Ik wil de vloer aan Mr Draghi geven voor zijn introductiestatement. Mr Draghi. Dank u. Dank u, meneer de chairman. Honorable members of parliament. This year we celebrate the 60th and the 25th anniversaries of the treaties of Rome and Maastricht. Despite the many challenges that we face as Europeans, we should never forget the significant achievements of European integration in providing peace, security and prosperity. The fact that the treaty that gave birth to the euro was signed in this country symbolizes the enduring role of the Netherlands at the forefront of this European project. I'm therefore honored to be invited to speak here at the Dutch parliament. Thank you. Today's event offers an opportunity to provide insight into the ECB's decisions and to listen to your views. It's indeed important for the ECB to reach out to all euro area citizens and their representatives to explain how we fulfill our mandate. The EU treaties democratically conferred upon the ECB, the primary objective of maintaining price stability in the euro area as a whole. This objective binds my colleagues and me on the ECB's governing council where our decisions are the result of a collegial debate. And we are held accountable for our decisions by all European Union citizens through their representatives in the European parliament. In my remarks today, I would like to expand on three points. First, I want to show how a very severe double deep crisis requires the ECB to deploy unconventional instruments to ensure price stability. And our measures are proving effective. Incoming data confirms that the cyclical recovery of the euro area economy is becoming increasingly solid and that downside risks have diminished. Second, I will discuss the possible side effects of these measures. And I will consider the different dimensions in which our monetary policy affects people's finances and welfare, which are sometimes overlooked in the recent debate. Finally, I will outline why the ECB cannot be the only actor contributing to the recovery. Other economic, financial and fiscal policies are necessary to ensure a sustained recovery. So let me start talking about recovering from the crisis and the role of our monetary policy. And let me start by recalling where we came from. The great recession, as it is called today, resulted in a protracted period of low inflation and low growth. Specifically, the euro area faced two interlinked and successive crises, a financial crisis in 2008, and a sovereign debt crisis that started to emerge in 2011 and derailed the rebound. The recovery that began in mid-2013 lost steam in the summer of 2014 as the external environment became more uncertain. At the beginning of 2014, credit growth was contracting at an annual pace of more than 3%, while overall economic growth was stalling. Since the start of 2013, inflation had drifted consistently away from the ECB's target rate of below but close to 2% over the medium term, reaching levels below 1%. Without counteracting measures, this low inflation could have turned into a deflationary spiral which would have deepened our economy's walls considerably. It was against this macroeconomic background that the ECB took decisive policy action to maintain price stability in the euro area as a whole in line with its mandate. In normal times, when inflation is above target, central banks raised the key interest rates to rein it in. When inflation is below target, they lower the key interest rates to stimulate economic activity and induce an increase in inflation. However, at the start of 2014, de deposit-facility rate had already been brought to zero. At the same time, financial fragmentation in the euro area was hampering the transmission of our policy as our monetary policy impulses were not evenly transmitted across countries or adequately along the yield curve. So in order to provide additional monetary accommodation en te supporten de recovering in credit, de ECB used a range of nonstandard measures to meet its inflation objective. These measures include a negative deposit-facility rate, targeted long-term refinancing operations, forward guidance and asset purchases. Net asset purchases currently amount to 60 billion euro per month en are intended to run until the end of December 2017 or beyond if necessary. These measures aim to influence short and longer-term interest rates, asset prices and loan volumes, thereby fostering economic growth and supporting price stability. De ECB's actions were not unique. Central banks in the United States, Japan and the United Kingdom also used asset purchases while central banks in, for example, Sweden and Switzerland also reduced key interest rates to below zero. Our measures have been very effective. They have led to very favorable financing conditions. Sinds mid-2014, banklending rates voor both firms and households have dropped by more than 100 basis points. And we have witnessed a pronounced convergence in borrowing conditions across both euro-euro countries and types of borrowers. These favorable financing conditions have in turn supported economic recovery. Let me give you a few data on that because often it's overlooked. For 15 consecutive quarters, euro area quarterly GDP growth has been consistently between 0.3 and 0.8 percent quarterly growth. In 2016, GDP per capita grew faster in the euro area than in any other major advanced economy in the world. 4.5 million jobs were created in the last three years. And unemployment in the euro area is at its lowest point since May 2009. Our monetary policy has successfully stabilized inflation expectations. In our March ECB staff macroeconomic projections for the euro area, the outlook for headline inflation has been revised upward significantly for 2017 and slightly for 2018 and unchanged for 2019. And these projections now foresee an annual headline inflation at 1.7 in 2017, 1.6 in 2018, 1.7 in 2019. Now the staff projections, this is very important to remember, the staff projections are conditional on the full implementation of all our monetary policy measures. So similar to what we have observed at the euro area level, economic expansion in the Netherlands has also strengthened. GDP grew at 2.2 percent in 2016, driven by strong domestic demand on account of improving business and consumer confidence and positive wealth and real income effects. In addition, unemployment has steadily decreased, registering at 5.1 percent in March 2017 and the Netherlands has more jobs now than before the crisis. Supported by low interest rates and strengthening recovery, the Dutch government ran a 2.9 billion euro surplus last year, its first surplus since 2008. And as an export-oriented country, the Netherlands is currently benefitting from the recovery in other euro area countries, especially as growth in global trade remains tepid. Let me now say a few words about the side effects of our policies. I'm aware that these very accommodative financing conditions have raised various concerns also in this house. Monetary policy measures always have side effects. But so far, the potential negative side effects have been limited. We are monitoring these effects very, very carefully, taking into account our price stability mandate. To ascertain the overall impact of our measures on our citizens, it's important to differentiate between the various ways in which they affect economic actors, such as households, pension funds, and banks. Let me start with the households. An accommodative monetary policy means households accrue fewer nominal returns on their savings. However, an accommodative monetary policy supports economic recovery, which in turns bolsters employment, income, returns on investments, and tax revenues. It therefore benefits households in their capacity as workers, entrepreneurs, investors, borrowers, and taxpayers. Similarly, there are several channels through which our policies affect pension systems. Yes, lower rates increase the present value of future liabilities of pension schemes. However, the liability side of the pension schemes is only one part of the equation. What happens on the asset side is also important. And our monetary policy has had a beneficial impact on this side of the equation as the value of investment portfolio has increased. Also, let's not forget, there are monetary policy supports pension systems indirectly by supporting employment growth and thus pension contributions. In any case, it's ultimately up to sound governance structures and long-term strategies to ensure the financial health of pension systems. Equally, monetary policy can have an impact on banks' profitability through various channels. Our assessment is that so far these effects tend to largely offset each other in aggregate terms. Low rates might reduce bank profits through the narrowing of net interest margins. Yet, at the same time, by supporting the recovery, a commodity monetary policy reduces delinquencies and defaults, including defaults of mortgages. Improved credit quality, coupled with higher lending volumes and an improved market value of assets, supports bank profitability. Of course, depending on the strength of their balance sheet, some banks may be more affected than others. Also, and we have to be careful here not to confuse the two aspects, banks facing structurally high cost to income ratios of limited diversification of income sources might have to revamp their business models regardless of the low interest environment. Finally, let me also address the risk of overheating in some parts of the financial markets. We do not currently see compelling evidence of overstretched asset valuations at the euro area level. We should keep this in mind. We can see local things, but not at the euro level. But we do see the real estate dynamics or high household debt levels in some countries signal the risk of increasing imbalances. Such risks also exist in the Netherlands. They relate to the continued very high level of household indebtness and the low level of mortgage collateralization. For this reason, we share the concerns expressed in a warning issued by the European systemic risk board in November 2016 and recognize that there is a case for mitigating measures. That being said, monetary policy is not the appropriate tool for addressing local and sectoral financial risks. Rather, targeted macro prudential policies which can be tailored to local and sectoral conditions are the right answer. Against the backdrop of a recovery that's becoming increasingly solid, the benefits of our policy clearly outweigh potential side effects. Also due to the pass-through of our monetary policy, there is now more and more evidence that economic growth is firming and broadening. Incoming data confirmed that the cyclical recovery of the euro area economy is becoming increasingly solid and that downside risks have diminished. Nevertheless, it is too early to declare success. Underline inflation pressures continue to remain subdued and have yet to show a convincing upward trend. The domestic drivers of inflation, namely wages, are not yet responding to the recovery and the narrowing output gap. Maintaining the current very substantial degree of monetary accommodation is still needed for underlying inflation pressures to build up and support headline inflation in the medium term. However, beyond the contribution of monetary policy, we also need measures to address the legacy of the crisis. Lift potential growth and upgrade our economic ecosystem to increase resilience to future shocks. And this requires action at member states level. Ambitious, country specific, structural reforms are needed to raise productivity, make economies more resilient and address persistent fragilities, including those inherited by the crisis. And member states need to pursue prudent fiscal policies to build up buffers for difficult times. National parliaments can play a central role in supporting such efforts. Our Accommodative Monetary Policy provides a window opportunity for pursuing such policies. For example, by alleviating some of the short-run costs of structural reforms, action at the European level is also required. The crisis has revealed significant fragilities, not only at member state level, but also in the economic governance of economic and monetary union. Some of the fragilities could be addressed already by applying the common rules we have all agreed on. Others, however, need to be addressed by upgrading our governance. How? Banking union needs to be completed by making parallel progress on risk reduction and risk sharing. En this includes adopting the European Commission's risk reduction package, which, among other things, implements some of the remaining Basel III reforms and further strengthens prudential rules in the banking sector. At the same time, we need to establish a European Deposit Insurance Scheme and a common backstop to the Single Resolution Fund. Ambitious progress towards a fully fledged capital markets union would also create more effective channels of private risk sharing in the euro area and reduce the need for fiscal stabilization. Let me conclude. The euro area has certainly faced its fair share of challenges in recent years, but things are clearly improving. In the euro area, the economic recovery has evolved from being fragile and uneven into firming, broad-based upswing. And ECB's monetary policy measures have been support in this recovery. We have established four criteria to confirm a sustained adjustment in the path of inflation consistent with our definition of price stability in the medium term. There would warrant a scaling back of the current degree of monetary policy accommodation. First, headline inflation should be on a path to levels below by close to 2 percent over the meaningful medium term horizon. Second, inflation should be durable and stabilize around those levels with sufficient confidence. Third, inflation will have to be self-sustaining, meaning it will maintain its trajectory even with diminishing support from monetary policy. And finally, I would say obviously, the relevant metric in each case is euro area inflation, not the inflation rates of an individual country. However, in order to reap the benefits of our monetary policy measures, other policy areas must contribute much more decisively to strengthening economic growth. And this depends on the policies pursued by member states where national parliaments, as I said, have a key role to play, but also depends on our collective ability to further strengthen the architecture of economic and monetary union in a way that fully reflects the interdependence among the euro area economies. Pursuing such policies will ensure a higher growth trajectory. Thank you, Mr. Chairman. I'm now at your disposal for questions and I apologize because I exceeded your time limit. Thank you. And you know what that means. Okay, now I give the... Also, when you answer questions later on, we will have to push buttons every time. I now give the floor for the first set of questions which are managed by Mr. Schouten of the Christian Union and Mr. van Dijk of the PVV, the Party for Freedom. And it's on the necessity of the ECB monetary policy. Floor is yours. Yeah, thank you, Mr. Chairman. Mr. Draghi, welcome in our midst. Brave also because you may be a hero in Italy. You may be a hero in the southern depth countries and in the world of investors like Goldman Sachs and the banks. But here in Holland, you're not a hero because our pension savings evaporated. And you call it a side effect. But for us, the Dutch people, it's a big, big effect. We had a lot of questions about the European Union and what you did by the QE. And the question is, was QE necessary? You talk about interest rates, you lower the interest rates. You make the euro a little cheaper. That's good for export. But I think QE as a package was not necessary. And the question we had one year ago the question then was, is QE not the wrong medicine because QE was on the road for a year. Inflation was still negative. So economy had a standstill. So was there any influence of QE on the economy and on the inflation that was not the case one year ago. Now, one year later, economy is still a little bit growing. Inflation is 1.9. And the question is, was this caused by QE or was it caused by the world economy, the low oil prices, the interest rates and the cheap euro. So my first question is, was QE necessary? And with the interest rates we have now, is it still necessary to continue with QE? Because 1.9% was your goal and you reached your goal you can quit with QE. Another question I have is, who profited the most of QE? Because there was a year ago people spoke about helicopter money because the QE money didn't come into the economy. And the question is, if it's not getting to the people and the real economy, who was profiting of QE? Were it only the debt countries like Italy who had a low interest rate on the sudden debt? Was it the investors who get a high price for the sudden bonds? Or were it the banks who were able to swap the bad assets for good assets? So my question is, who were the benefits of your policy and of QE? Well, first of all, just to answer about the fact that I'm not an euro of I'm an euro or where I'm an euro. Actually, it's not my job to be a euro, just to pursue my mandate. And my mandate is price stability. And that was what was at stake exactly at the beginning of QE. And that's the reason why we had QE. To comply with our mandate as we are bound by the law. I said that we are aware of the effects of QE on QE and generally, more generally. By the way, you touched on QE. But in fact, interest rates are low also because of the negative rates. But that somehow was not raising the same concerns at QE. That's the question I have. But interest rates are low for the combined effects of the two measures en because of our forward guidance and as a symptom of the crisis that was there. It's a legacy of a situation which was very close to deflation. And that explains the need of our measures. As I said in my introductory statement, interest rates had already gone to zero. And that explains why we had to move. Like, by the way, many other central banks in the rest of the world. In U.S., in U.K., in Japan, and everywhere else. So it was not unique to our own policy. It was necessary. Yes. Are we seeing the outcome? Yes. We saw the data before. Employment data, job creation, credit data, flows, spreads, interest rates. We shall not go through the list again, although we can do it later on again. But also for the Netherlands benefited enormously from the monetary policy that has been in place in the last few years. Coming to pensions, it's quite clear. We are aware of these effects. Low interest rates increase the value of liabilities. But as I said, also increase the value of assets. Also true that they reduce the return on investment. So it's a combined effect. And this combined effect is certainly not positive in the short run. But two considerations. First of all, we have to judge the ultimate effect on pension funds over a longer horizon. Pension funds have to survive periods with low rates, high rates. It's not the first time that rates were low and real rates were negative. We can go back to the 70s, to the 80s of the last century rates have gone real rates, especially have been different levels. But the other reason is that our monetary policy has supported the economy, has produced basically has been one of the major factors behind the current recovery en therefore has supported employment, has increasing contributions to the pension funds. And generally speaking, increasing the welfare of people is also a main point in support of the pension funds. But it's also another more general consideration that I want to make. Interest rates go down and then go up. And economies as well. We are now in the positive part of a business cycle. But we should ask a more fundamental question. How can we, and we say we, I mean all countries and only the Netherlands, continue paying pensions with an aging society? And that's where we probably would do better focusing our attention on how we raise potential output growth in the long term. And for that monetary policy is fundamentally irrelevant. For that we need structural reforms, we need infrastructure, we need investments in education. And I think collectively we should focus our attention on that because as the recovery will improve, as it is improving, natural interest rates will also go up again. But the real challenge is the long term challenge. Thank you. Oh, I'm sorry, you asked me who profited from the QE. Who profited the most. It's interesting. Let me answer this. First of all, the economy as a whole profited. Unemployment has reached levels that we haven't seen since 2009, in the days of workers, employment, entrepreneurs profited. But you seem to imply that somehow investors profited more. We've asked ourselves this question whether QE increases income inequality because after all asset prices go up because we buy assets, therefore asset prices go up and the ones who hold assets have a capital gain. En certainly, for example, banks profits, banks capital positions went up and certainly benefited at the same time. Of course we have negative interest rates on our deposit facility, which is hurting banks. But the question is whether the QE has increased inequality or not. And the answer is no, because what is the best measure we have to decrease inequality is to increase employment, to create jobs. And on that we have a very strong evidence. More than four and a half, four million and a half jobs have been created. In the last three or four years, if I'm not mistaken. Thank you. Miss Schouten. Thank you. Thank you, Mr Draghi, also from my side. Also for being here. You talked about the necessity of the program and also the necessity of structural reforms in the member states. Is it true that when you decided to start the program and to lower the interest rate, that it was also to give the southern European countries time to restructure their economy, to take the necessary structural reforms and by that the northern European countries also would contribute by that because of the lower interest rate and the pension funds. And on the other hand, is it also true that because of the program there is no real necessity anymore for the countries to reform their economies. So you structurally emphasis the necessity of structural economic reforms. But meanwhile, you give a lot of time to countries not to do that. We are mandate asked to pursue price stability for the euro area as a whole. Not distinguishing between northern countries, southern countries, but price stability is our objective. First, second, our mandate doesn't relate necessarily to create or destroy the incentives for countries and governments to pursue structural reforms. I've been asked many times whether low interest rates do decrease the incentive to undertake structural reforms in different countries. And we've given to this quite a bit of thought and analysis. Now, the answer is by and large no. There is no relationship. And first of all, factually, the main reforms in the labor market that had taken place since the crisis have taken place when interest rates were already low. Second, what sort of structural reforms do we have in mind? In many countries structural reforms have to do with changing the judiciary system, changing the education system, changing the constitution, changing the electoral law. Do you really think that they have to do with the level of interest rates? But there is one area where there is a relationship and that's budget consolidation. Clearly if it's more difficult to finance a deficit, therefore there will be more incentive to consolidate the budget earlier. So the relationship is limited to budget consolidation and it's not the case that actually structural reforms are going to be undertaken for consolidating the budget. One doesn't change the educational system to consolidate the budget. Structural reforms follow a political cycle, much more than an interest rate cycle. But also, let me ask you, do you really think it's the task of a central bank to stimulate the governments to undertake structural reforms? We can point out the need for structural reforms. We certainly, I think we would agree that it would not be legitimate from a democratic viewpoint to have a central bank that actually engages in a policy dialogue with governments for them to change the constitution or change the electoral system. So structural reforms follow different logic by and large. Is the situation satisfactory, however? No, and there I would agree with you. So for reasons other than our monetary policy, structural reforms are lagging behind. Should we do, please? I got some feeling that all the good effects of the program, it's because of the program, you say, and all the negative side effects is because of the national programs, what the national governments do. Isn't that really not something that is also related to what you are doing? No. Exactly, no. The answer is absolutely no. Structural reforms have their own inner logic and the argument that low interest rates reduce the incentive to undertake structural reforms doesn't stand scrutiny. We've looked to that. So it's with the exception, as I said, with the budget where some consolidation may be put forward, but there we see a situation which by and large is better than it was before the crisis as far as budget consolidation is concerned. So, but as I said, I would agree with you and with everybody who thinks that the situation is not satisfactory as far as structural reforms are concerned. They are lagging behind and we should think about doing something and there are things we can discuss later about what can be done. Thank you. I would like to open the floor for other questions from any other members. Not from the public. Is it from Raan? Thank you, Mr. Draghi, for coming here. As ECB president, you are clearly not responsible for the way or type of investment companies can make as a result of your corporate sector program. But would you agree that climate change is one of the most pressing challenges we are facing and that one way we face this challenge is to divest in fossil industries? And in this view, so this is the first question, and in this view what is your opinion of the fact that the investments of the 270 million a day 53% seems to be within the energy and transport sector at the likes of Shell and Volkswagen which are not known for their divestment activities? So again, I acknowledge that you are not responsible for the investment, but would it not be far better to have these ECB investments help the energy transition in order to fight climate change? What is your opinion on that? Mr. Draghi. Thank you. First let me preface saying that the ECB and the governing council is fully aware of the problems of climate change is very sensitive and ECB participates in various capacities to that. As far as the specific program is concerned I should say that it's been run with monetary policy considerations, risk management considerations and giving a level playing field to all the actors in the program. However, the eligibility criteria have been quite broadly designed so that we end up in fact buying also lots of green assets. Dat is wat ik kan zeggen. We are not excluding certain assets that you rather see both less or excluded but we are also not excluding green assets. We are also buying into that. Short follow-up? Dat is een great news to hear but the majority is still in let's say fossil and transport industries and would you not agree that it would be beneficial to have certain stronger ecological and or welfare filters in your selection program? We should definitely have this in mind but as I said the program is predominantly designed with monetary policy and risk management considerations and also level playing field. We should be able to compromise with all these three and four criteria also with climate change. We are trying to do our best on that. Mr Omzicht is de next question. Thank you very much, chairman. To my... I had a short hope that you would announce further tapering here within this house but since you haven't you will run into another problem by December, namely that by December counties like Finland and the Netherlands European system of central banks we'll have bought about 33% of the debt so you hit the limits which we're hinting to mischouden. Are you then going to stretch and make sure that central banks buy even more of the debts of these governments or are you going to relax the rules and allow the central bank to buy maybe 50% of whatever of the national debt of a member state? Mr Daghi. The answer is no, absolutely not. We have our rules and they are in place. We periodically have discussions where these rules should be in a way some members of the governing council think they could be changed but the majority of the governing council has expressed several times in keeping the rules as they stand. Now you're saying there will be limits but in fact our programme is running smoothly and so we intend to stick with our rules which will never achieve the levels of debt that you hinted at. Omzicht, short. Thank you, so that means that by the end of the year when you have hit those limits for relevant counties in the eurozone like Finland and the Netherlands you must stop the programme because otherwise you don't have an evenly distributed buying of bonds because you would buy more of Italy or Germany which have larger stocks of bonds than Finland or the Netherlands relative to their economy because they have more state debt and then you will stop the programme because you stick to the limits. Is that what I understand? No, that's not foreseen and it would be certainly not what our forward guidance based on the current information and the current assessment of the economy says. We will see that our programme continues smoothly and that's it. We'll stay with our rules. Thank you. The next question is for Mr Van Rooijen. I also have Mrs Leijten and Mr Baudet on the list and after that we move to the next block. So Mr Van Rooijen. I would like first to thank Mr Draghi for his presence today. I would equally like to thank him for ECB's policy decisions over the past years but I'm sorry to say, it will not be possible. My party has serious issues with the ECB aggressive interest rate policies and as will be made clear today we do not stand alone on these matters. I have the following questions. The treaty defines the ECB primary goal as price stability. Has the ECB opinion and what definition of price stability shifted over the past years? Please elaborate. It's not clear what the consequences of discontinuing of QE would be. What would be the consequences of interest rates in general if the ECB would discontinue its QE programme tomorrow? How much would interest rates rise in countries like Italy, Spain and Portugal and how much would interest rates rise in your countries like Germany and the Netherlands? Final question. With the Dutch pension system, the Dutch central bank mandates the use of a risk-free interest rate in order to calculate pension obligations many decades in the future. My question is, we presume you agree that these risk-free rates are affected by the ECB policy, QE policy and we also presume you agree that these effects are temporary. Is that correct? Thank you. First let me say once again that our monetary policy measures and here I continue the answer to my first question really monetary policy measures were necessary. I may have to stress this point were absolutely necessary at the time. We had no contribution from external demand. We had no fiscal policy impulse. We had no endogenous propagation of growth. So there was nothing other than our monetary policy in 2014, 2013 and 14 when we started. Second, when our monetary policy will be when our forward guidance will change when we will start exiting from this monetary policy. What is this? It's a meeting bell. So when the plenary session has a shift of the meeting this is done, you hear it. So it's the end of your policy. It's the end of your policy. Every time you mention the word QE. That's the end of your policy. Ok. Then we will naturally exit together with the improvement in the economy and especially of course in our objective in the path of inflation towards our objective. This will happen when as I said before the inflation rate will durably converge towards our objective and its convergence is self-sustained and it's going to be for the whole of the euro area. At that point in time interest rates will start going up. Will start increasing. By the way let me also say something that is often goes unnoticed in policy debates. Even though our short term rates are still negative the deposit facility rate rates along the yield curve have started to increase naturally with improved prospects of the euro area economy. Now then your question is will the southern countries for example just for example be prepared at that point in time. Well this in a sense is the same answer I gave about structural reforms. It's not our task to prepare countries for that event. Our task is to pursue price stability no matter what is the state of preparation of these countries. Clearly they had time to consolidate the budget to undertake the need of structural reforms and we will see what happens when we have to go out. But in deciding to study our strategy for the future we have in mind only one thing the objective price stability. You also asked me about pension funds. Certainly our low interest rates have affected pension funds and also surely this influence has not been positive but it's a short run influence. We have to judge pension funds trajectories, pension funds strategies over a longer horizon. In there the fact that our monetary policy has been essential fundamental for promoting the recovery is probably our greatest contribution to a return of pension funds to a situation of stability and solidity. Thank you. De volgende vraag je hebt een vraag voor Miss Leiden kan je je vraag aan de volgende blok want we moeten niet reis in de trofels. Miss van Rooij, een klein short follow-up en dan gaan we naar de volgende blok en dan zijn je de eerste twee vragen van de volgende blok. Miss Van Rooij. Van Rooij, je spreekt over de zijkende effecten. Deze zijn negatieve aan jouw. En ook dat de niet alleen lijbilliteen vervolgens in de lage interest maar ook dat de assets vervolgens. Maar de figuren zien dat de vervolking van lijbilliteen veel hoger is dan de vervolking van assets. Kun je op dat reageren? Ik heb dat niet alleen gezegd. Ik geloof dit. En ik heb ook gezegd dat in de vervolking de regering van investeringen in de lage rate vervolgens in de lage rate niet goed is voor pensionsfans die er natuurlijk garantieven zijn. Maar met dat gezegd, op hetzelfde de lage rate zijn nodig voor de vervolking en voor de vervolking. Ik denk niet dat pensionsfans genoeg van een prolonged recessie zijn vervolking. Dus we moeten daar short-term negative consequences met long-term positive effects en be confident dat met de vervolking interest rates ook en return on investments en de present value van lijbilliteen zal ook decreasing. Dank je. Dus nu gaan we naar de volgende blok die gaat over discussie al een beetje, maar de effecten onwantige zijkend effecten en risico's zijn vervolking voor de volgende blok voor mr. Harbers, mr. von Weinberg en mr. Snells mr. Harbers Dank je wel, mr. Draagie voor de vervolking op het parlement vandaag we appreciëren heel veel dat wanneer de lage rate is een independende instituutie we kunnen deze kans hebben om onze vragen te discussiëren met jullie ik would like to start this block about the side effects with two questions the first is you already spoke about some of the side effects for instance on pension funds and households but can you also give your view about the question of wrong allocation of capital for instance the risk that companies especially small SME companies have access to capital at very low interest rates and that might lead to the risk that they will lose competitiveness for instance that companies that are at the end of their competitiveness will live longer because they still have access to capital that's the first question and the second is the effects for our national central bank the Dutch national central bank the depth of dnb has increased with 70% and when the interest rates will rise again the risk occurs that our national central bank has to sell a part of the depth with a loss and in order to eliminate this risk dnb and also the boendersbank reserve money for the moment when the stop and the interest rates will rise can you tell us what is the general ECB policy for national banks to deal with these risks and how can it be avoided that depths have to be sold with a loss in the future and our other member states doing the same because if they don't we fear the risk that the governments of these countries will have to pay again Mr. Draghi we've talked about the negative effects of low interest rates before but in fact low interest rates have positive effects on all those people who have mortgages on entrepreneurs on everybody who borrows money so we have to look at every side of the of the reality and and as you said by and large low interest rates have been essential for promoting the recovery and here it comes to the specific answer to your question I mean I wish we had such subtle instrument of analysis to assess exactly whether a company is structurally viable or not in other words each time you lower interest rates you have companies that were not able to get credit at a higher rate now they get credit at a lower rate but does that mean that they are structurally non-viable or it may mean other things we frankly don't know we don't have these instruments to know exactly whether a corporate buyer or SME is structurally viable or not what we know is a different thing we know that following the the low rates following the QE in our monetary policy the economy of the euro area now is growing strongly which and important thing this growth has been going on for quite a while since 2013 until now so it's almost 4 years it's about 4 years growth average 0.4 0.5 each and every quarter so it means that by and large the majority of the company was structurally viable they borrowed money when they needed they borrowed money some of them were possibly in a liquidity crisis but by and large they continued to produce and they increased the economy's output so if there are these structurally unviable companies that have profited from these lower rates they were not the majority certainly because otherwise we had not seen such an increase in output now coming to your second question our monetary policy doesn't have as a scope the profits of the national central banks so our policy is geared to the objective of price stability but having said that we estimate the overall asset purchase program is actually creating profits for national central banks not losses in some case where central banks have to purchase bonds at negative rates and that could cause losses however the maturities they are binding to are very short so the book losses are going to be small the program is very modest in its essence and it's going to be undertaken only when it's necessary so we've been very very cautious in allowing for purchases below the deposit facility rate and one question because we in our national central bank made reservations for possible future losses and the Buddhist bank did so but is that a general policy for national central banks in every country and if not what our chance is that these central banks and their countries will encounter problems when interest rates are rising again especially for their government finances all central banks that I know of are actually booking provisions for future losses so I I don't expect I don't expect disasters there thank you thank you welcome Mr.Dwagi the unconventional monetary policy of the ECB was meant to prevent the European economy from falling in a protracted crisis of deflation unconventional economic circumstances you mentioned in your introduction let me take the opportunity to say that I think that you were right in this environment with a lot of critical questions however I have some questions about the nearby future now that you are coming in a period that you have to deliberate on tightening monetary policy and I have some questions about the arguments that are playing a role in those deliberations for example are you looking at budgetary policies of national governments are you looking at other forms of policy reform policies of national governments and are they playing a role do you see specific risks in this period that you have to to tighten monetary policies what kind of risks are there and final question what are the risks of continuing the loose monetary policy of the ECB well at the same time the Fed is slowly raising interest rates so can you elaborate thank you well the our monetary policy had been designed with the objective of price stability when price stability was at serious risk in 2013 and 14 of a deflation and will be designed with price stability mind when this risk is now that it's by and large gone will be designed with price stability mind also on the way out of the present situation so that is the only criterion that we have in mind if countries that's why countries have to consolidate their budgets have to undertake the need and whether they had it or not it's not a relevant consideration in our strategies not in both directions in both directions we when we look at today's situation we see that what we call the balance of risk for growth has definitely improved the balance we said for several months the risks were tilted on the downside but the compositional risk has changed originally it was it was mostly domestic risk that we were concerned about and then it became more of a sort of external risk component like geopolitical risk but also on that front we see we hopen we'll continue to do so that one of these risks was the threat of protection is has receded another risk was a less brilliant performance of emerging market economies now we see that world growth is actually stronger than expected so the balance of risk for growth has improved what does it mean as far as our objective is concerned namely inflation well the inflation situation is by and large what it was before so we haven't seen a convincing sign of yet of an upward an upward movement in underlying inflation we don't see yet convincing sign that this convergence is towards a durable and is self sustained but certainly some of our elements or our guidance are meant to address the tail risk of inflation of inflation behavior and to do the extent that the balance of risk for growth gradually improves also the probability of these tail risk become less and less thank you but you are looking at what other central banks are doing and what their policies are does it mean anything for the ECB when the Fed is slowly raising interest rates or are you just looking at the different inflation measures we are old central banks are responsible to their national mandate and likewise we are responsible for price stability in the euro area so that's what we are looking that's what we are bound by thank you yes thank you very much for this opportunity for these exchange of views of course respecting each other's respective responsibilities and the for my party much valued independence of the about the european and the dutch central bank I would also like to look ahead a bit we've seen that the unconventional monetary policy took the ECB in uncharted waters en ik denk zoals mr snel zei dat de effect is in een verandering een melding van de economie en een verandering van economisch stabiliteit en ook de grootte condities op hetzelfde, er is één ding wat meer moeilijk te zalen in uncharted waters en dat is eigenlijk te zalen uit het weer dus kun je misschien een liberatie op het risico zien daar en ook het fact dat als je in uncharted waters te lang zult geen plaats meer te gaan als er een nieuw crisis zou zijn vragen voor een unconventionele politie meer we hopen dat we er niet in de verkeerbare toekomst maar niets van ons heeft een magische laag om de toekomst kun je dat misschien voorleggen bedankt bedankt ook voor het agree dat onze monitorele politie de melding van de euro-area de economie en de materialisatie van de deflationaire risico onze monitorele politie was succesfull nu is de vraag is het tijd om of is het tijd om te denken over exit of niet de verandering is dat dit tijd nog niet komt, we zijn nog niet daar we hadden probleem solid probleem in grootte we hadden de balans van risico over grootte dat blijft te proberen en dit heeft implications voor de probabiliteit waarvan een verkeerbare risico is geïnteresseerd het materiaal is maar we zijn nog niet daar want wanneer we kijken op ons jadstick, namelijk de inflatie we zien dat dit niet de kriterie die in mijn interdactie ingeweld is, namelijk dat we naar een inflatie rate die is dichter onder 2% over het medium term dus het is niet alleen touch en go, maar het zou een durige convergencie zijn dat het ook zelfsustraind is in andere woorden wanneer we beginnen te praten voor een verkeerbare risico we moeten dat de inflatie rate na dat we verkeerbare verkeerbare risico zal blijven en we zijn nog niet daar en een van de meeste redenen is dat de onderling in het verkeerbare geïnteresseerd is maar we hebben ook te kijken over dat de onderling eenс de onderling in het verkeerbare inkleding in de onderling niet nog eens een behoorlijk investerende geëerd is waarom geen behoorlijk in beide behoorlingen zijn en een van de meeste redenen is de de erg subtiel beheerbare de überwezen wij switches Sommige bewegingen, in een nominele manier, maar nog steeds veel behoorlijk. En de redenen van dat zijn eigenlijk dat de SDECB-balitair, de manier die vandaag in een nieuw stuk van onderzoek is, is dat de labormarktenlaken daar zijn. Het is groot, het is nog steeds daar. Het is natuurlijk veel meer veranderd, maar het is nog steeds present. En ook, maar de andere factoren maken je meer veiligheid. Bijvoorbeeld, de labormarktenreformen die in sommige landen hebben nu veel tijd geleden gehaald. Dus hun depressieve effect op wages moet worden doorgevallen. En op hetzelfde, productieveerdheid gaat eigenlijk op. En nu, de Nederlands, het is een keer in het poos waar labor productieveerdheid is. Dus op één hand observen we de labormarktenlaken met een certain veranderd en persistenteerd. En op hetzelfde, we zijn gelukkig dat we in het nominele wages relatief tevreden moeten zien. Ja, dank u. Ik zie de bezoek van misschien een veranderd attitude in het verkeerbare futur, maar ik weet dat er verschillende plekken zijn voor jou om te communiceren. En ik zal het totaal agreeen op de bezoek ook op de labor unions en de bezoekersorganisaties om te bekijken op de veranderd van wages en discussie in de Nederlands ook. Misschien zou ik één seconde een verschillende vraag vragen. Ik denk niet om de exacte moment van de eind van de afdeling van de afdeling van de sterkste financiële monitair politie. Ik denk dat het klaar is dat we in een heel low interest rate environment na de eind van de sterkste financiële monitair politie stond. En je hoeft dat in je introductie- en discussie over de afdeling, maar ook technologische ontwikkelingen. Zullen we zeggen dat het meer nodig is om de Europese economie in de low interest rate te maken en is er een specifieke rol daar voor de ECB in dat te promoteren? Er is een keuze voor het promoteren om de Europese economie meer in de low interest rate te proeven. Een meer resiliënte toekomst, de langere term van de low interest rates, zelfs na de eind van de QE-politie of de negatieve interest rates. Ja, eerst laten we me eindigen op de nominele wages. Of course, wage-determinatie is in de handen van de sociale partners. We zijn niet aan te suggesten in alles, maar voor één ding. De nominele wages-movementen zijn de strengste factoren om te reassuringen dat een increase in inflatie duurzaam is. Het is true, de interest rates blijven in de low interest rates, maar er is iets, ik denk dat ik het eerder zei, zelfs als de short-term interest rates blijven in de low interest rates, dat betekent niet dat de interest rates in verschillende maturiteiten ook in de low interest rates blijven. In feite hebben ze al gegaan. En dit zal meer en meer bezoekbaar zijn als de relatie zichzelf ontbreekt en als we de eerste beeld van een verhaal in de onderliggende rate van inflatie zien. Dank u. Ik wil nu de deel openen voor andere vragen. Ik begin met mevrouw Leiten, mevrouw Baudet en mevrouw Nijboer. Een van de goeds van de Europese Unie is om de functie van de marktdeconomie te creëren. En als we op het CSPP-programma reflecteren waarin de Europese centrale bank van multinationals, van de Nederlandse, bijvoorbeeld, Armea, ASML, Heineken, Shell, Gasunie, enorme, rijke bedrijven die dit geld niet nodig hebben. Maar je hebt zelfs een onderzoek met de programma Swiss Countries, zoals Glencore. En ik zou je reflecteren op hoe deze soorten privileges voor multinationals substanen, opnieuw van een klein en mediume corporatie die niet accesse heeft op dit programma, hoe deze politie substanen op het lage plekken field en een heel functionele marktdeconomie. In fact, in fact, our policies do support market economy. Our corporate bond program is designed with, again, like everything else we do, with a price-stability objective in mind. Therefore, it is oriented and designed to create monetary expansion that would support our price-stability objective. Is it true that only supports large companies and not the small companies? Let me observe that since the launch of our program, the issuance of corporate bond issuance has increased markedly, so everybody issues more. The funding costs have gone down and SMEs do benefit from these lower funding costs. But what is even more important, the fact that many corporates now use the market to finance themselves means that they use the banks much less to finance themselves. And therefore they have opened up space in the bank's balance sheets for them to lend more money to the SMEs. In fact, in all our bank lending survey, especially the last one, we are observing that SMEs report to us that finding credit at reasonable interest rates is not a problem. Let's not forget that two years ago, until two years ago, SMEs were reporting that finding credit was the second most difficult problem they had in running their business after finding clients. Now both of them have disappeared from being a problem for SMEs. Your statement that small and medium enterprises can get their credits from banks is something I don't really see in our real economy. They complaining that they don't get these credits they want to. I was talking about the CSPP program where corporate bonds of multinationals are bought. And not of these SMEs, small and medium enterprises, they cannot enter this program. We asked our government a list of corporations, multinationals, who benefit from your program. Er is none small or medium enterprise on it, only multinationals. I was asking you about the level playing field and the functional market economy. Is it inflation rates, whatever it takes? Is it price stability, whatever it takes? Or is it also a little bit of market economy within the program of the European Union? It's the market economy. Our programs do have price stability in mind but they are not meant to distort the economy or the price in all the interest rates or the spreads. Now in fact we see that spreads and interest rates are not very far from historical fundamentals values. Now in general we have our survey with the... Now the survey is for admittedly, it's not for the Netherlands only, it's for the whole of the Eurozone. En the small, the safety service, so-called survey on the access to financial enterprises reveals that SMEs don't actually have not credit constrained. And in fact they find from banks the credit they need. So the other thing is why aren't SMEs in the program? That was your question. Now SMEs may not be in the program, first of all because they are not the typical corporate bond issuer. Usually the ones who issue bonds are large companies. That's one... The second point is that our program is also designed with risk management considerations in mind. And so it was designed with the view to kind of contain the risks that any program that buys corporate bonds would naturally entail. Maar, zoals ik heb gezegd, SMEs in general in de Eurozone zijn niet constrained. De volgende vraag is voor M. Borda. Mr Draghi, je hebt gezegd... Ik denk dat het nodig is van je QE programma om de euro-currency te houden als we in zo'n ongelukkige landen een enkele currency samenvormen. Dat is een belangrijk maatje. En natuurlijk, dit is een geweldige kost voor de Nederlanders. De pensioenschap, onze bedrijven, de verdediging in general, de economische groei. En dit is waarom in de Nederlanders nu... ...we hebben een ongeveer een aantal mensen... ...die dachten of we moeten blijven blijven in de eurozone. En dit brengt mij naar mijn vraag. Je hebt gezegd in januari dat er in iederland... ...leven de eurozone de eeuwen te zetten voor de eeuwen... ...maar om de kansen van Italië te blijven in de eurozone te blijven. Zoals we in de Nederlanders nu een systeem hebben... ...in de target-2 systeem van rond 100 miljoen euro. Dus, door je eigen woorden, betekent dat als de Nederlanders... ...die de eurozone blijven, die een van de belangrijkste punten... ...in mijn partijse programma, we zouden terug... ...100 miljoen euro uit de Zuiderlandse landen in de eurozone... ...according je gevoelens. Misschien. Dank u. Ik ga u vragen, zoals ik in de Europese Parlement... ...de similare vragen heb gegeven. De eurozone is ongevoelbaar en dit is de deur. Ik zal niet speculeren op de hypothesis... ...die geen grond in de presente deur heeft gegeven. De eurozone is een succes... ...voor de eurozone en voor... ...especiale voor landen zoals de Nederlanders. Zoals ik eerder heb gegeven, had je een economische situatie... ...dank je, ik moet zeggen, eerst en vooral... ...aan je strengheid, aan de manier... ...aan de kwaliteit van je geluiden... ...aan de fact dat je business-environnement... ...is groeitvriendelijk... ...aan je eigen geluiden... ...maar ook op de onderdeel van de monitorie-politie... ...had je een economische situatie... ...waar het zoveel goed was. Maar er is ook een betere reden... ...en er is een betere reden... ...waar de euro alle landen benefitte... ...maar speciaal landen die streng zijn... ...groeitse, met hoge productie... ...en een business-favoriete... ...legale environment. De euro heeft de unieke markt geprotecteerd. De meeste van jullie zijn te jong om de 80's... ...en de jaren 90's te bevinden... ...waar we de periode gevalaties van alle landen hadden... ...en er was een streng instabiliteit daar... ...niet de prijsstabiliteit daar... ...maar de betere landen die streng zijn... ...maar ze konden zien dat hun betere landen gewaardigd zijn... ...omdat ze in de gevalaties... ...die ze ervan robben... ...die hun betere landen hebben. De unieke markt was een mevrouw... ...waar onze integratie... ...maar het was ook een ontwerp dat onze perspiritie... ...de collectieve perspiritie was. En de unieke markt kan niet worden geprotecteerd... ...waarom met een karantie... ...maar het onverstandige verandering is. En dat is waar de euro over te considereren... ...in de jaren 90's... ...waar het plezier in de Maastricht-treatie was gevonden. Dus ik denk dat we... ...die verandering van deze jaren... ...die ons geen duur moeten hebben... ...waar de euro een succes zijn... ...en ook waarschijnlijk een punt voor het betere. Ja, suurlijk, we kunnen ongeveer... ...die betere landen van de euro... In de economische situatie is het betere, maar je zei dat je niet wil speculeren over de posibiliteit van de eurozone. Maar dat is niet precies wat je in januari deed. Je zei dat het in Italië leeft om de billen te zetten. Je speelde eigenlijk om de eurozone te brengen. En zou het niet fair zijn om dezelfde principes te hebben als de Nederlanders? In de Europese Parlemente was ik dezelfde vraag om dat te vragen. Ik zei dat je de technische antwoord kan hebben, maar de politie is de euro-easy revocable. En ik speelde niet om hypothesis die geen grond hebben. We zien dat dan. We zien dat dan, zeker. De volgende vraag is voor Mr Nijbwer. Dank je voor de mogelijkheid om de ECB-monitair politie te discussieven. In m'n opinie moet ook de domain van de ECB zijn. Maar nationaal politieën moeten de consequentie van deze monetair politie adepten. En we hebben al de wagers discussieerd. Je collega Klaas Knot van de Duttscentralbank heeft al de wagers in de Nederlands voor een paar jaar geleden. Maar er zijn ook twee andere dingen die ik wil uitleggen. Bijvoorbeeld de stieprijzing, de huisingprijzen in de grote stad, en de oude tijd hoog op de stokmarkten. Ik heb twee vragen over dat. Mijn eerste vraag is, wat is jouw verantwoordeling van deze risico's? En hoe zal het financiele stabiliteit effecteren? Mijn tweede vraag is, wat kunnen we als politieën doen om deze risico's te mitigeren, speciaal op de huisingprijzen en met respect naar de regulatie van banken? Persoonlijk ben ik een sterk proponente van een increase in de leveragesregio voor banken van 3 onder de Europese niveau tot 10 procent. Ik denk dat dat gaat helpen. Maar ik ben heel erg geïnteresseerd over jouw opinion. Question en de antwoord in één. Mr Draag. Dank je. There have been price increases in the housing sector in various countries in the large cities. But when we consider the average house price increases at large, we don't see it yet a sign of stretched valuations. Let me also add that in some cases these house prices were coming from periods of prolonged stagnation. So that is something to look at. But when we move to financial stability and we ask ourselves the question, are these increases threatening the financial stability of the euro area? We should also ask another question. Are these increases accompanied by an increase in debt? And that's where we don't see evidence. We see that basically credit remains relatively subdued. We don't see a significant increase in leverage. So by and large, we don't see the other side of what would be a worry for financial stability. Having said that, however, there is a specific condition in the Netherlands where household indebtness is actually high. And so the case for prudential measures in that sector in the housing sector is there. And that's why the ESRB had issued a warning. Is the monetary policy the right tool for addressing this issue? The answer is no, because it's a local price increase of a certain sector in a certain country, in a certain region of this country, namely the large cities, not only in the Netherlands by the way, also in other countries, we see the same phenomenon. Therefore, it's not so much monetary policy that should be used, but it's what we call macro prudential tools. And national authorities have started moving their prudential tools in a dialogue with the ECB as well. As you know, the ECB has the power to top up, to add to the national government's measures. We certainly are in favor of a loan-to-value ratio of something that would go beyond 100%. So we are in favor of a careful monitoring of this situation and the undertaking, the introduction, the application of macro prudential measures were needed. Thank you for this answer. I have one question about the healthiness of the European banks, the banking system. I totally agree that it should be macro prudential or national policies that should improve these banks and not monetary policy. But when we see the non-performing loans in the southern part of Europe and we see the leverage ratios in some of the northern countries, also the Netherlands, there could be a case that the European Central Bank says because of, on behalf of the financial stability, it should be wise that policy makers take steps in the direction to increase the leverage ratio to decrease the non-performing loans. Well, when we look at the banking system in the euro area, we should admit that over the last three, four years there have been significant progress. Especially as far as solvency of the banks is concerned. The capital ratios of all banks today stand well above what they were three or four years ago. So a substantial effort has been made in raising capital. However, when we move, the issue is not so much now today solvency but profitability. The leverage ratio that banks have today, of course in the aggregate, I've not discussed in individual banks situation is adequate. We have to close now the Basel III review process. And so we don't, it's not that the main issue. The main issue is profitability. Profitability is low, both because business models have to be updated, introducing digitalization. Business models that are still branch based with very large personnel component have become very costly. The cost income ratios in some countries and some banks are way high than what's sustainable today, way higher. And in some countries, of course, you have the legacy of non-performing loans, which is a weight on their profitability and on their capacity on the banks, on these banks' capacity to actually give credit. En daar de issue is, namely, to create an environment where these loans can be disposed of, can be sold, can be taken out of the balance sheet. And this has to be done via a market process. So there are many ideas there that people talk about bad banks, the creation of bad banks, and we can discuss this, of course. But the key thing, in my view, is not the creation of a bad bank or a box that could quickly accelerate the disposal of the MPLs. It could be helpful. But the key thing there is to create an environment where these loans can be priced and sold. And that is important. In some countries, you had this accumulation of non-performing loans because of the crisis, of course, but also because the legal environment is one where these loans cannot be priced and sold. Legislative improvements have been made. Somehow they addressed only the future loans, the future MPLs when the problem is a legacy problem. So they should have addressed the past MPLs as well. I think that's the main thing. And for that, one needs changes, certainly changes in the bank's governance structure, in the risk management, in the debt recovery procedures, but also convincing legislative improvements where a market for MPL that is transparent can actually take place. By the way, all countries that had such markets had eliminated the MPL problem. So experience of the others should teach something. Thank you. Thank you. The last question of this block is for Mr. Van Rooijen. I ask you, it's only one question, no follow-up, because then we move to the next block, Mr. Van Rooijen. Thank you. I would like to refer to an article which appeared in investments and pensions Europe, IPE, and which is titled, ECB's policy could cause the Dutch pension system implosion. The article clearly mentions our 50-plus initiative draft law as a possible solution. We propose to create a temporary risk-free rate of a bottom of 2%, just for as long as the ECB continues with the QE policy with a maximum of five years. My question is, what do you think of this proposal of our party which allows a temporary lower rate? Is it a legitimate measure for the Netherlands? Is a 2% bottom rate reasonable? And finally, the consequence of the present situation is that the purchase power for pensioners is already without any indexation for the past 10 years, leading to a strong decrease of purchase power. You spoke about short-term negative effects, but what do you think if it's already 10 years of no indexation with a expectation that it might be another five years of no indexation and even cuts in pension payments? Mr Rai. Thank you. Let me say something I haven't said so far. I mean pension funds regulation and supervision don't fall under the preview, the remit of the European Central Bank. So it's not up to us to comment on the structural reforms of the Dutch pension funds. So let me preface this, because it's essential. Having said that, I can only restate that our monetary policy has price stability objective in mind. And we are aware of the other effects on pension funds. Low interest rates are a problem for pension funds where, as we said before, negative consequences are more than the positive, once in the short term. But also since negative interest rates or low interest rates are the prerequisite for recovery in the medium and long term, we will see that the pension funds will benefit from the recovery and certainly have been protected from the deflation and from the recession. So I will stop here. I will stop here with other than giving a sense of, together with an appeal to patients, also a sense of confidence that the situation is improving, is much better than it was three years ago, is continuous to improve and with improvements also the problems of the pension funds will be resolved. We move to the next block. The next block is prepared by Mrs Leijten en Mr Omtzigt. It is about the institutional position and mandate of the European Central Bank. Thank you. Thanks for the answer so far. I am very interested to hear that you want shorter balance sheets in the Netherlands. That comment comes from the institution with the largest balance sheet within the whole eurozone. In its ruling on the OMT program, the European Court of Justice has confirmed that the article which forbids monetary finance would de factor be violated if actions taken by the European Central Bank led to the indirect monetary financing. Put it differently, it is not only the letter of the statutes, but also the spirit of the statutes the ESCB has to adhere to. The Court decided that such purchases may not be used to circumvent the objective of prohibiting the monetary financing of member states. Thus, when the ECB purchases government bonds on secondary markets, sufficient safeguards must be built into the intervention to ensure that the letter does not contraven the prohibition of monetary financing. The Court was satisfied in the OMT case it was satisfied because the ECB said that it would refrain from making any prior announcement concerning either its decisions to carry out such purchases or the volume it would purchase. But what happened in QE? The ECB announced exactly how much bonds would be bought each month and that purchases will last until December 2017 and maybe even after. Moreover, the European Central Bank has no intention to ever sell the bonds it already has bought and will buy in the future having a stack of 2.500 billion euros on the balance sheet. The governing council of the bank has decided that sales are not expected to be normal practice in the foreseeable future. So if we put the QE program along the lines of the court decision because we try to keep you exactly to your mandate it seems that QE constitutes de facto monetary financing. Do you see that differently or do you agree it's monetary financing and do you have convincing legal advice that what you do is within the limits given by the mandate Article 1, 2, 3 of the functioning of the market. Thank you. Let me give you first two short answers to your last questions. It's not monetary financing so I disagree with you. And second we have all the legal advice we need to prove ourselves and the rest of the eurozone that's not the case. That is not monetary financing. First of all we QE is in place for the objective of price stability. Second the treaty and the statute of the ECB basically give the ECB discretion on which instruments to use in order to pursue price stability. This treaty and statute provision was confirmed by the ECJ in its pronouncement on the OMT where the ECJ the European Court of Justice said that the ECB has if I'm not mistaken broad discretion in the use of its instruments. Fourth the ECB in deciding the QE as well as the time when we announced the OMT had all precautions so as to make sure that we don't do monetary financing. Namely we buy on the secondary market we have issue and issuers limit so there is no case here and that's it. Well you say you only buy the secondary market but you already announce what you buy the secondary market with a time lag of two weeks when these bonds are remitted so the traders at the primary market know that after two weeks they can come and sell them at your doorstep of the European Central Bank. That circumventing the prohibition on doing it on the primary market. Second you say you have a limit on the issue that's why I asked my first question the limit first was 25% then it became 33% and well the limit could also be 100% well you couldn't go much beyond 100% of the outstanding debt because then you would sort of buy something which doesn't exist anymore unless you try some derivatives. So you're going every time a step further away from a functioning market economy taking huge risk I mean your Dutch central banks took 3 billion already in a provision for if things go wrong for instance of interest rate rise and you still believe that this is fully within the framework which you have and that you still are not doing any monetary financing even though you've bought 2500 billion euro of government debt by the end of the year. Yes we do. We do, I think we believe that our precautions have been put in place exactly to avoid this danger that the issue limit has been moved upward but still consistent with what the collective action closes in bonds for C so it's not been moved since then it's not been moved since then but still I would recall what the European Court of Justice has said giving broad discretion to the ECB in what instruments to use in order to pursue price stability. Thank you. On the last part you say indeed you have the collective action clause if you have more than 33% you can indeed block restructuring of for instance the government debt if it needs to so if Italy needs to restructure and you hold 34% you would have a very unfortunate position that the ECB could block the restructuring because it would lose or want to do the restructuring and you're a political actor but even if you have 32% then you just need one other relatively small actor and you still have a veto power and you're an enormous political player in a necessary restructuring if the case comes up how do you mitigate that problem if this case becomes true because the levels of debt are still rising in part of the eurozone and if such a case comes up will you then look at the interest of the eurozone or at the interest of the balance sheet of the European system of central banks Thank you. Sorry for repeating but we look at price stability Nr. 1. 2. We have our mandate 3. We have the treaty that says that we don't do monetary financing 4. We are sure that the precautions we put in place are enough to avoid this risk It doesn't seem like I want to answer my colleague on this No, I have answered Absolutely, yes But he was concerning the risk whether you hit the present which he was talking about You want me to say what we would do in case certain unrealistic hypothesis would take place I'm not going to say that We don't want to speculate on things that have no probability of happening Period, yes sorry, yes You say there is no probability that at any point in the future any of the national debts of the eurozone countries has to be restructured that's a zero probability event We said I don't know about that I don't want to speculate on that We have decided a 33% limit It's enough for the collective action closes and that's period We are not going to speculate on the fact that if there is one that has 1% we could do this and that That's frankly speculation in which I don't think it would be right for us to spend time Is it also speculation at one of the countries of the eurozone at some point will need restructuring and that a large amount of debt stays within the European system of central banks for which the European taxpayers will foot the bill at the very end So far the taxpayer hasn't foot any bill So this also we may discuss this about the dangers of something that might happen So far what I see as a reality is that our monetary policy has supported the recovery in the eurozone has created 4.5 million jobs which were not available before That's what I see so far That's the reality, the rest is speculation Ok, so you don't want to speculate about things that could happen Clear Let's concern something else that is a subject when it concerns a mandate and that's transparency The ECB programs concern a lot of money and there is a lot of discussion about it and there is a lack of transparency a lack of proper accountability mechanism to see what you do why you do it and based on which context you have Are you prepared to publish your own agenda in order we can see with whom or which banks or corporations you spoke of Are you prepared to wordly reveal the minutes of general meetings and furthermore do you agree that we need more information about the European banks to be published for example about the stress test and the sanity of individual banks After this question we open the floor for the other questions for that I have van Dijk, van Raan en van Rooien but first we have to answer on this question We think that transparency and accountability are indeed essential They are the natural complement of our independence So I completely agree with you that we should do our best to improve transparency and in fact we've done significant, very significant progress in the last few years on this front as the recent assessment by the NGO Transparency International would acknowledge Now you're asking me where I publish No I'll come to this if you want You're asking me about publish my agenda I do publish my agenda I'm not asking that You're asking whether we publish the account of our meetings We do publish them We're asking them What does it mean? No it was decided to do the accounts Not the minutes Like other central banks do by the way And then what else did you ask me? About the SSM The SSM is already very transparent If things can be improved we'll certainly do it But I think you should ask Thanks to the separation principle I think you should ask this to Madame Nui Thank you First of all, Mr Van Dijk By the way, everybody One question, no follow up if I want to give you all a chance Van Dijk I was wondering because you were a little irritated about About what? About the amount of money the risk you take by putting 2500 billion at the end of the year purchasing bonds and that's 25% of the total debt of the euro countries So you already have 25% of all the debt of the 19 euro countries on your balance sheet that is risky and I think that in a lot of with me and the problem is how many countries are on the limit of 33% I read the Portuguese is almost 33% the Irish is always 33% at the end of the year the Netherlands, Finland so you are getting to the limit of what you can purchase how many countries when you touch that limit how is the balance then when you cannot buy anything from Holland but you can buy a lot from Italy still we are bound by rules and we intend to stick with them and we are also confident that our program will run smoothly I will stop at this there is no other way I can respond to your question about risk but how are we reassuring you that the rules are going to be respected ok but I am sorry I said the rules sorry how independent are you the next question is for Mr Van Laan thank you you look remarkably calm for a man who issues 2.5 trillion out of thin air so to speak especially with your chief economist there is no plan B as he stated the publicity but that is not my question my question is in the first block you said there were some ecological filters in place to decide could you name say 3 of those filters ecological or animal welfare filters to decide whether to buy bonds from certain companies you said they were in place maybe I misunderstood just one word about the size of RQE in terms of purchase of public debt our size is comparable with what is being done in the United States less than Japan comparable with the United Kingdom so again no uniqueness to our monetary policy oh no I'm sorry there must be a misunderstanding there was no filter we buy also green assets but as you said today the non-green component is dominant in our purchases because we buy with a program designed for monetary policy and risk management considerations and level playing field for all the corporates are you asking that sorry so for the purpose of clarification so there are no ecological filters or criteria the only thing we say is that we also buy the rest next question is for Mrs. Schouten thank you I have a question for the long term about half a year ago Klaas Knott our executive director of the Dutch Bank he emphasized in one of the Dutch newspapers that the countries in the eurozone instead of what we maybe thought more and more diverged instead of convert the day the day that come closer let's say that and and he said it becomes more and more difficult to have one monetary policy for the whole eurozone do you agree with that well again a reality shows that the outcome has been different we have an index which measures the growth in value added in each country which is a proxy for growth in GDP and then we calculate the dispersion of this index in other words how much this growth rates diverge across countries so now we are at the same level as we were in 1997 so it means broad convergence in the euro era countries clearly during the crisis there were huge divergences divergences in rates, in credit and in growth rates and employment rates if we have to see if we have to look now at the situation it has improved on that account as well so that is a good very good news also for another reason convergence in our view convergence and trust are the two pillars on which the eurozone is founded and so any improvement we have on that ground of course we have to have another type of convergence which was the one we were discussing before convergence as far as structural reforms are concerned and that's the other part which will have to be addressed more strongly in the future next question is for Mr Harbers and Mr van Vrolijnen Mr Draghi, I would like to raise a totally different question the relation between the ECB policy and the FET policy I have the following questions how could the FET pass to policy normalisation and the subsequent rise in the US interest rates affect the eurozone interest rates and the ECB pass to policy normalisation should we expect the ECB to counter unwanted effects of major monetary policy adjustments would higher US interest rates make it easier for the ECB to raise interest as well thank you, let me first make two considerations the first is that each central bank is bound by its national mandate in our case the mandate is price stability for the whole of the euro area and second consideration is that the two central banks are in parts of the world that are in a different stage of the recovery cycle being the United States more advanced than we are the third consideration is of course that we look at the overall set of financing conditions and as to the extent that these financing conditions can be changed by other factors one of which could be in countries interest rates we have to take this into account into our assessment but for us the key point remains a durable self sustained convergence of the inflation towards our objective over rate which is close but below 2% thank you, the next question is for Mr Baudet yes Mr Draghi the monetary authority of Singapore 29 monetary unions were dissolved since the end of the Second World War it found that remarkably little macroeconomic volatility happened around the time of currency union dissolutions I'm sure they were all irrevocable until the moment they turned out not to be moreover throughout history we haven't seen a single instance of monetary union that didn't necessitate over time political union if you believe the euro is here to stay if you still support the single currency in Europe does this imply that you are a supporter and perhaps believe it's necessary for the eurozone to develop into a political union a full political union over time thank you well first of all let me just remind ourselves about what we call the euro barometer namely that pole that's been made and the last pole we have is last autumn still shows a support for the euro in the eurozone around 70% and an average and it's over 50% in all countries 56% of the Dutch would prefer a future outside of the EU I'm quoting the euro barometer now second point is is basically that as I said if you ask the ECB president he will tell you that the euro has been a success and so it's only a matter of time for the citizens of the eurozone all citizens because 70% already understand that but the others will soon acknowledge the benefits of this third last week about 10 days ago I've been invited to give a speech at the Jean Monnet Foundation on that occasion I had the opportunity to read some of his writings in his view was no doubt that the sequence is single market single currency political union and that's still the case but is it tomorrow no when is it we don't know why because you need to satisfy the two conditions namely trust trust in the compliance with the rules trust in the compliance with the governance of the eurozone and convergence we can't have a union with divergent countries thank you thank you very much and we can't have a union where you have permanent debtors and permanent creditors there has to be convergence thank you thank you with those words I would like to close this meeting but not before I've actually thanked Mr. Draakie for accepting the invitation but also for the good discussion there are no minutes of the meeting or of the introduction statement are on the website of the parliament so there is a print out of the introductionary statement or lastly I would like to thank you we have bought you a small memento and it's very unusual that we do that but we thought it was quite special that you accepted our invitation there's a small story to the memento it's in this nice bag of our parliament but I was thinking can we do something related to this topic could you please have a few more minutes can it be something related to this topic because of course we are more than you have seen we are more than interested in this topic of monetary policy is that because it influences our people and companies is it because as Dutch we are sort of wary of sailing in uncharted waters as Mr. Von Weinberg mentioned but actually I think more fundamental is that the first financial crisis which was heavily studied was a financial crisis here in the Netherlands and it's a memento of that crisis that I would like to give you and it's the crisis of the tulip of the Netherlands and so what we hope is that before your next conference or any other conference look at this tulip in your window side it runs on solar energy so it's also sponsored by our green parties but look at it and think of us and also of this very productive discussion thank you thank you thanks