 Good afternoon and a warm welcome to the ECB, to the Generation Euro Students Award. A warm welcome to the students, to the teachers and also to our colleagues from the National Central Banks. My name is Wolfgang Kreuzel, I'm the responsible for communication here at the ECB. Today we have the 10th edition of the Generation Euro Student Award. It's the first time since 2019 that we do it in presence, so it's great to see all of you in person here. Before that we've done it a couple of times due to Corona on screen and it makes a huge difference to have everybody here and to look into your smiling faces. I'd like to congratulate you all for your achievements and also your teacher, so great job. I hear that you enjoyed Frankfurt yesterday, the weather, the sun and the fair temperatures probably helped. And I also saw that you visited the ECB and I hoped you liked what you saw. And with that I would now like to give the floor to President Lagarde who will address you now. Thank you President Lagarde. Thank you very much Wolfgang and good afternoon to all of you. You come from 13 different countries and our goal, your goal and my goal, should be to make sure that next time around there are not 13 countries represented by 20 countries represented because that's the number of countries in the Euro area and there's no reason it should only be 13. Although I'm sure you are the best and the brightest in the lot of those that competed and I know that for some it's been a real, real hurdle. I know that you went through one and two, three and sometimes four rounds of selections and you are really standing on the shoulders of all those that you've eliminated before you. So congratulations for the job that you did. Most of you have looked at economic matters right in the course of this work but I'm going to ask you a question and that will be maybe more addressed to those of you who like history. Try to tell me what is in common between Westfalia, Vienna and Roma. Yes, please. Very good, excellent. Okay, you're eliminated. Somebody else is going to have to answer the second question. What is, so Treaty of Westfalia who's actually an all-encompassing Treaty of two treaties but Westfalia, Treaty of Vienna of course and Treaty of Rome. What is the big difference between them? If nobody finds out I'll come back to you. Oh come on. What do they have in common first maybe? That's probably, we should start with that. Like so many treaties. It put an end to, yeah, who said that? Be brave, yes, excellent. So all three put an end to the war. But there was one treaty that was on a completely different plate because most treaty after a war tend to divide and allocate, right? This goes to the winner, this goes to the loser. You're losing this. You, the boundaries are going to be re-established in a different way. But, okay, you have the answer. You two, you're talking. You two guys, come on. Versailles is another one, you're quite right. I could have mentioned Versailles as well. Yeah, and actually it would present the same characteristics as the Treaty of Rome which is the one that I'm interested in of course because it's where many, many European things eventually started. So instead of dividing, allocating, shrinking, putting boundaries, the Treaty of Rome did exactly the opposite. Instead of division, it united. Instead of creating boundaries or strengthening boundaries, it had the goal to push out the boundaries and eliminate them to create this single market where capital people, goods and services could freely move around. So why am I taking you to this treaty business? Because Rome was not so long ago. And we are celebrating here at the ECB our 25th anniversary tomorrow. Okay, so happy anniversary to the ECB. You are just a little bit younger than the ECB but not that much. And the ECB is clearly a continuation of foundation that were set out amongst people, countries, governments that had been at each other's throat for decades and sometimes centuries that decided to unite rather than divide, that decided to open up rather than close down, that decided to include rather than exclude. And to this day and with an institution like the ECB, which is turning 25 tomorrow, it's a spectacular development. Now, you travel by yourself or with parents from one country to the other, professors included. You don't even think about it anymore because you've always had the luxury of this very, very large territory comprising many countries, but where you have one single thing in common. Not the language, some of you speak Portuguese, others speak German, most of you speak English, so that's in common, but something which is more fundamental that you have in common. Currency, absolutely. Wherever you go, whatever you buy, you're going to use your euros. That is what brings us together. And that is what we are trying to be custodian of and we're trying to secure, protect for the whole of the 348 million Europeans. And you are, in a way, inheriting all these years and decades of hard work that were put into this project of uniting rather than dividing, including rather than excluding. And it is something, I don't mean to lecture today, but it is something that is so precious in times when conflicts arise, when wars at the doorstep and when large powers are at each other's throat wondering what is going to break next. We have not broken, we have built. And in a way, the construction of the euro, which is what you all have in common, whether you're using your card or your telephone or you have banknotes and coins in your pocket, that is common to all of you. And that has been exactly the process that you have just gone through. To come here and to arrive at the level where you have arrived, you had to work hard, you had to explore really complex topics, you had to understand monetary policy, you had to find the roots of inflation, you had to understand what was the relationship between the two, what was inflation expectations, what had mattered. The ECB had to do the same thing and the euro was built and developed over the course of those hard, complex questions being explored and resolved. So that's one thing we have in common. Another thing that you had to do is work as teams, right? For each country, there is a team of five and a professor, as I understand. It's not so easy to work as a team, because you always think that you know better and the other team members are okay, but they're not so smart. And each of the other four thinks exactly the same about you and the other three. So working as team is about compromising, understanding, listening, coming to a sensible platform that is going to make sense for the project. Well, guess what? This is exactly what the European Central Bank had to do over the last 25 years. Listen to the views of the first 11 national central banks that gradually came from 11 to 20 today. To appreciate the concerns, the differences, the cultures, the history. The Baltic states, Lithuania, Latvia, had a different history from that of Italy and Spain. Germany and Malta have some things in common, but not that much. So coming together as teams also meant that for us around the table that you saw this morning at the governing council, the 26 seats, everybody their microphone, everybody their views. But we have to come out of those meetings every six weeks when we have a monetary policy decision to make with one view, one policy, one set of communication. And it's hard because they all think that they're much smarter than the other. So I'm not going to tell you more because I'll be happy to take your questions and I hope that my answers will be short enough so that we can go through all 13 questions. But I just want to encourage you to, number one, remember how all this is precious in terms of uniting rather than dividing, including rather than excluding, no matter what the differences, no matter what the history, no matter what the separations. And I want to encourage you to participate in that project because it's not the end of the story. We have been built over the course of time. You are the reflection of your first 15, 16, 17, 18 years. So is the ECB, so is Europe. And it's a living project that we need to continuously push towards improvement and enhancement of the institution for the benefit of Europeans. So those were my remarks. You will take away probably 10 or 20% of what I have just said. But if you were to remember one thing, what we have in common is precious and is a substitute to very nasty divisions that have separated us for the worse. We are now here for the better. Thank you so much and now I'm up for your questions. Thank you very much, Madam President. Yes, so if you can raise your hand and Stefan or Alex will come to you with the microphone. We'd ask that you stand up, maybe tell us your name and where you're from and ask your question. Okay, who would like to go first? Good, you're brave. Yeah. So one thing that maybe you will remember as well because you will in the course of your life take the floor and ask questions. There's one thing that is very easy to remember, okay? If you want to be seen, stand up. If you want to be heard, speak up. And if you want to be appreciated, be brief. You can try all three. So hi, I'm Nika, representative from Slovenia. And our question is in times of supply shocks such as recent energy crisis, how long does ECB take to evaluate the situation before responding with appropriate measures? Thank you. Well, great question. I think the textbook would have predicated that because it's a supply shock, we see through it, it will abate by itself and we do not have to take specific measures. Now, obviously what we have faced was not only a small supply shock. It was a massive shock that was compounded by other shocks that eventually brought supply shocks with demand shocks and where one sort of escalated the other. So I would say that the first few months until December 21, we had assumed that it would be a supply shock and it would, we could see through. From September 21 onwards, we knew that it was not just a see-through process and that we would have to take measure to remove quantitative easing first and then given that we had forward guidance in our books, move to interest rate hikes. And that is what we did. Okay, next question. Yeah, maybe here, Alex at the back. Thank you. My name is Tatiana, I'm from the National Team of Slovakia and in your speech you've mentioned the great uniting power of Euro. And our question is how do you perceive the fact that countries' currencies such as check-ground, Polish slot, the Bulgarian level, even dollar are at the highest interest, sorry, have the strongest exchange rate ever. So does it mean that the Euro is losing its international trust? Thank you so much, but I would say quite to the contrary. Because when I look, we just published actually the role of the Euro as an international currency and we are making slight progress. The Euro has been around 19% of central bank reserves around the world. The dollar is the overall big international currency of reference. It's been like that and for ever since the Second World War and it managed to move away the sterling, the pound. But from this sort of very stable 19% of reserves, we've now hedged up a little bit. Not by long shot, but it's directionally up. So I wouldn't say that it is declining or that it is losing trust. I think that to the contrary, it is certainly stabilizing and hopefully continuing to increase its position as an international currency. We do not target an exchange rate relative to other currencies, neither to the dollar, nor to the basket of currencies that includes the five key currencies in the world. But we are very attentive because it matters for inflation. And we have over the course of the last three years, first of all, depreciated relative to the dollar, then the dollar depreciated in turn, then there are ebbs and flows to that, which generally reflects either the state of the economy, the geopolitical circumstances which have an impact because the sort of safe heaven status that the dollar enjoys entails currency appreciation in general. I'm confident that we have to continue being on the right track. There are other currencies that are moving as well, none of those that you've mentioned, but I would say that the yen has always been the third, but way behind us. The reminbi is something to watch because clearly China is trying to push its currency as an international one since it's been included in the basket of special drawing rights from the international monetary fund perspective. Great, next question over here. Hello, my name is Stefan and I'm from Luxembourg and I wanted to ask a question more structural in nature. So my question is, should the ECB's mandate be extended to include dealing with unemployment like in the United States? And if not, why not? You know, ever since the start, so in the treaty we have a very specific mandate that is laid out with a primary objective and one single primary objective which is price stability. And then we have secondary objectives which are also laid out in the same article of the treaty which refer to the economic policies that are led in the European Union. And through that, obviously we have to take into account economic growth, trade, employment. And we are attentive to those secondary objectives and the secondary objective, if I recall correctly, the wording is without prejudice to the first objective. So the first one is the one that overrides everything else. But employment is necessarily taken into account nonetheless. This was the intention of the founding fathers. I think that the best contribution that we as a central bank, we can make to the economy and to as much employment, if not full employment, is to deliver price stability. Because then, you know, economic actors know where they stand. They know if and when to consume. They know if and when to invest. They have some predictability of the stability of prices. So that's what we do. So we take it into account. We contribute to it. I'm not certain given the complexity of what my colleague from the Fed has to do, particularly at the moment, whether having the two of them would be of great service. Thank you. Maybe somebody from over here. Yeah, Alex, maybe the front row. We're trying to get all 13 questions so you have to run. Not you. Thank you. My name is Patrick and our team are from Finland. Our question is, what does the central bank think about fiscal dominance? How could fiscal dominance be avoided better than at present? I would respectfully dissent with the second part of your question, because I don't think that we are the victim of fiscal dominance at all. You know, fiscal dominance is something that is just prohibited under the treaty. We cannot monetize debt. We cannot finance fiscal spending. And I think that all necessary measures were taken in particular at the time of the accommodative monetary policy, which led the ECB to purchasing assets on the market to make sure that it was secondary market, that it was not pure straight financing. And I think it's critically important to be fiscally not dominated in our independent monetary policy. I've seen examples of countries when I was managing director of the IMF, where the central bank was under fiscal dominance, where it took a phone call from the Treasury to have yet another printing of large amounts of money and this is not a happy ending story. I hope we can really respect that independence of the central bank as far away as possible from fiscal dominance. Thank you. Maybe over here. Hello, my name is Alexandra and I'm part of the Austrian team and we wanted to know what the hardest part about your job is and if this is what you imagine for yourself when growing up. No is the answer to your second question. I was not in my wildest dreams thinking that I would be central bank governor, let alone European central bank president. The hardest part, I think the hard and challenging part, is the teamwork that I was referring to. When you have many very smart, very well briefed, very experienced national central bank governors around the table and try to bring them towards a joint position, which is not a given on day one. So every six months I have my challenge. I know more or less where they stand. I have the intuition of where we need to land. I need the patience to listen to them and the humility to give them full credit for what the ultimate solution will be. That's hard, but it's also a very, very humbling exercise because so many often, just like on your team, you say, I know the answer, I know the answer, but sometimes you should just stay away from the answer and let the others come up with the answer because then it's theirs, not yours. Well, it's also difficult if ever you consider doing a job like that. Especially if you like to talk and if you like to share and if you are sort of a spontaneous person, is to constantly watch what you say, what words you use, what it implies, what interpretation there will be. That's hard as well. But there are moments when you let your hair down and you can be yourself. So it's not always like that. You can sing in your shower if you want. Great, maybe a question from, yeah, maybe the second. Hi, I'm Milana from the Dutch-speaking team of Belgium and our question is what did you study and how exactly did you become president of the ECB? Well, thank you for your question. My background is very academic because I studied Latin and ancient Greek. That was a family tradition. My mother was a professor of Latin and ancient Greek, so we just had to do what you wanted us to do. Then after that I studied political science, I studied English literature and I studied law and I eventually became a lawyer and I decided to become a lawyer because I wanted to participate in the abolishment of the death penalty. That was my goal. Unfortunately, when I finished my study, the death penalty had been eliminated from the legal arsenal of France. So there went my vocation. But I was a very, very happy lawyer for 20 years. And I did have my little bit of study of economic sciences, but I'd rather not talk about it because then people managed to underestimate me, so I made a mistake. Okay, we might have time for maybe one or two more questions. So, Stefan, maybe the second row from the back? Okay, if I answer in 10 seconds, maybe we can take them through. Come on. Bonjour, I'm Paul from France and we actually have a question. What do you think of the introduction of a digital euro inside of Europe and do you actually believe in it? Thanks. So, it will not be a substitute. It will complement what available payment means we have. It will not eliminate banknotes. And I do believe that we must be ready to launch a digital euro. Think of it. Everything is digital or digital, as the Germans often say. Why not the currency? Maybe we don't know yet, but I want us to be ready. The PBOC in China is ready. A few of the national central banks that don't communicate very much about it will soon be ready. I want us to be ready. I don't want another central banks or a big Google of this world or Meta or anything say, you know what? I have a digital currency. Please get out of the way. It will be now Meta. No. It has to be ours. Okay, Alex, maybe. Sorry. I'm Pablo Núñez, the speaker of your Montana team from Seville, Spain. And your question is, you are the first female president of the ECB. Statistics show the low percentage held by women in high institutional positions. So, from your personal experience, what initiative could be adopted to increase this female representation? Do you think that the fact that the ECB has a female president has a certain positive impact on the opinion of the institution and its proximity to the general public? I'll tell you something. I don't know if it has changed the perception of people, but it has certainly changed the perception of many young women who believe that they can do it too. If I can do it, they can do it. And if only for that reason, I'm very, very happy to do the job that I'm doing. How can there be more? There can be targets. There can be pipeline buildings. There can be scholarships. It's a fact that in econometrics and in macroeconomy and in monetary policy studies, there are way fewer women than men. Those who are competing in those classes, in those universities, are generally top notch female economists. And that's good. It's good for all of us, for girls, for boys, and for the institution itself. Thank you very much for asking the question. Any more hands? Yeah. Hello, my name is Ruben from the German team. I would like to know how your personal leadership philosophy influences your decisions as president of the ECB. It takes longer because I know that predecessors and others took a different view and had determined beforehand what the outcome would be. Not my style, not my strength. I feel much more comfortable if everybody is taking ownership of the decision. So it takes more time. I think it's more inclusive. I think it possibly reduces the friction and the descent to the benefit of a more cohesive approach. Okay, over here maybe, Alex. We'll take all questions. We have three. Good morning. I'm Sebastiano and I'm from the Italian group. My question is, do you think that the current inflationary pressures may ease in the near future? The answer is yes. Because of the action we're taking, because of the fact that part of the supply shock that we were discussing in the early day are gradually fading out. This is certainly the case with energy. It is certainly the case with the supply bottlenecks that put a big break on supply. As a result of that, numbers are coming in today. Some have come in yesterday. Headline inflation is definitely coming down. Core inflation and underlying inflation, which is striping out all the very volatile elements, is not receding yet enough. We're going to have to continue attacking that, which is stickier, but it is coming down. There are two more, I think. One, two, three. Hello, my name is Mayel and I'm from the speaking team of Belgium. Our question is, following the virus crisis experiences in the recent years, the ECB has always had to intervene and sometimes use new tools to resolve these situations. Do you think it still has other tricks up its sleeve if small crisis occur again? The answer is yes, but because they will be secret, I'm not going to share them with you. I will share one secret with you. I think the two most efficient tools are tools that we have in the toolbox and that we have not used. And for those who study ECB, it's the OMT and it's the TPI. So OMT is the outright monetary transaction and the other one is the transmission protection instrument. These two have been worked out, elaborated, communicated just enough, markets know. And it's been very efficient. So there's one here and one there. Thank you. So I'm Joan from Portugal and don't worry because our question is quite simple. So what is the thing you have done in your life that you are most proud of? Thank you. Giving birth to my two beautiful boys. And I wish you the very same. Hi, President Lagarde. My name is Peter and I'm from the Irish team. You're from where? Ireland. Oh, OK. Our question for you is do you have any innovative solutions for the situation that can occur or monetary policy being implemented by the ECB might be suitable for Germany but might be the exact opposite to what might be required in a peripheral region or country such as Ireland or Greece or any country like that? Thanks. That's a tricky question and a very good one. I would observe that there has been some convergence and I think that that convergence is accelerating at the moment and to a certain degree inflation and the differentials of inflation are helping. But it's a complete, I mean it's conventional wisdom and I'm stating the obvious that in addition to monetary policy we also need fiscal policy. We also need banking union and we also need capital market union and we will never be the green economy champion and the digital economy champions if we do not have all components which is why I think that the focus on banking union, capital market union mechanisms that are not particularly sexy and glamorous but which are necessary for investors to have full confidence that they can invest in Europe have to be progressed and Pascal Donohue who is one of your compatriots and a good friend is doing all he can to succeed on that front. Okay, I think we've exhausted all the questions. Who else? No? Everybody's had their question. Well done. Yes, so we'll move now to the final part of the event which will be the award ceremony. So as I mentioned before I'll invite each team up individually onto the stage. President Lagarde will present you with your certificate and you'll have a photo opportunity. So just to say if you could enter and exit the stage here and you'll be having your photograph just here. Okay, and we're going to do that super fast that everybody has their photo. Okay? Oh, I have to read the names? No, no, I can read them. You do that, okay. So if you'd like to step over here. Yeah, yeah. Go ahead, go ahead. So the first team is our team from Austria. So it is Lieberkus, one, two, three. Yes. Okay, do you notice anything? Come, come, come. I'm going to stand in the middle. Do you notice anything? Thank you. Okay, so here is the certificate. Who is the team leader? Shall I give it to you on behalf of the team? Yes, congratulations to all of you. Thank you. Well done. Okay, I think you go this way. The second team is our Dutch speaking team from Belgium. So it's E compass. Hi. Do you notice anything? Come, come, come, come, come. Come this way because then, yeah, there is a better balance. Congratulations. Thank you. Next is our French speaking team from Belgium. It's E commands. Stay here. Hi. Thank you. So you'll be the team leader for the exercise. Thank you. And next we have our Finnish team, B and Norci. Come, come, come. Hello, lovely to meet you. You aren't shaken. Yes, you're right. You have it. Great job. Next is our French team, so it's team Marjorie. Did you eliminate all the others? All the others, okay. Come, come, we balance. Come, come over here. So next we have our German team, which is FTX risk management department. Do you notice anything? Bravo. Next is our Irish team, Rockwellians. Next is our Italian team, so it's your Rufi. It's balanced out. Yeah, perfect. Congratulations. And next is our team from Luxembourg, so it's AMAS St. George's. What does that mean? It's your initials. Come, come, come. Come, come, come. Great. Do you have everybody on the photo? You hold it, it's yours. Next is our Portuguese team, the Frankfurtos. Thank you. Nice to meet you too. Frankfurtos. That's a great name. You hold on behalf of the group. Next we have our team from Slovakia, so it's Skolnikovsi. Oh, there is quite a group. Thank you. Next is Infle Torchki. One of you is going to have to pronounce the name of your team. Yes. So what is that? Infle Torchki. It's a riddle. Okay. Infle Torchki. Is that right? Almost. Not quite. You have it. And last but not least is our team from Spain, so the Euro Montana. Okay. You've been leading the charge. Congratulations. So if you want to give some closing remarks, Madam President? No, I think, you know, I think it was wonderful to have you. I hope you've enjoyed the last two days that you spent here and that it gives you the desire, one day, to come back and to join the project or do something else that unites rather than divides and brings people together and split them apart. So thank you so much. I don't know when you're going away, but whatever you do tonight, be careful, be wise, and don't drink too much.