 Good afternoon. Thank you you all for being here today a special thank to the European Central Bank and to the Bank of Portugal for organizing the first European Central Bank as dialogue I would like to welcome Professor Mario Draghi the president of the European Central Bank and Dr. Carlos Costa the governor of the bank to our school of economics and management of the University of Lisbon University of Lisbon is the largest university in Portugal. We have about 50,000 students 3000 faculty members and 3000 members of the staff we work with a budget of 400 million euros half of them coming from Competitive budget We are doing very well. We are research university as you can see when you look to the Shanghai ranking that we see That we rank better than any Latin South Europe University except France So we are very honored to have you here today to host this event in our school of business and economics and to provide an Opportunity for the Portuguese students in economics and management to ask questions and discuss with a voice with Professor Draghi the role of the European Central Bank and some of the most relevant Economic topics into those world Dr. Draghi professor Draghi. Thank you very much for sharing with us your knowledge and experience Thank you. Any thanks, Professor Antonio Cruz Sarah for your welcoming remarks My name is Christine Graf. I run the communications of the ECB and I will be moderating through this Q&A session today Before we start I would just like to remind you that we're going to do a live webcast on the ECB web page and For those of you who are listening and who are watching us live You can follow the conversation using the hashtag ECB use dialogue on Twitter And without too much ado, let me introduce to you the president of the European Central Bank. Mr. Mario Draghi In the University that is the Lisbon and this beautiful library with 80 students from different universities in Lisbon And we've also asked you to submit their questions via social media, which is our first trust so that can participate virtually And I really wanted to start with asking you why is the ECB doing this youth dialogue? Why is it so important? Well many thanks many thanks But let me first also thank the rector Antonio Cruz Sarah and Isaac for hosting this first ECB youth dialogue and of course to my friend governor Carlos da Silva Costa from Banco de Portugal For this close collaboration in the organization of this event, but especially I want to thank you students who I know how Pressed you are because this is exams time So the fact that you've taken time here to be it's really really something. I'm very thankful. I hope I'm not gonna disappoint you Before we start however, I wish to say something about the Tragedy that this country experienced not long ago and not far from here Just want to express not only solidarity with the families of the people who lost their lives, but also to express how how close we all are both my colleagues at ECB and myself and For this I just just a few seconds of silence before we actually get into into our work Thank you. Thank you Let me now respond to Christine's question why? We organize this event And let me give you two at least two key reasons first, we have we have a theme this year for this event, which is Somewhat different from what the central bank usually do and it's about innovation and productivity These are topics that are very important for the economic future of Europe But I think even more fundamentally for your own future The youth as you know the youth unemployment rate is very high here But also in other several other countries in in in the eurozone In some countries it's close to 50 percent here is 28 percent It's declining, but it's still very high now Youth unemployment rates are normally higher than total unemployment rates But there are big difference across countries and this says basically one thing that is some of these Difference can be accounted by the way labor markets function and the function differently in different countries So how all this is linked to innovation and productivity? This is in fact at the core of the conversation. We will hold in the ECB forum in Sintra during the next two days We can achieve growth with low levels of employment Can we? This is one big question The key to productivity growth lies not just the creation new ideas But also and I would argue especially in its diffusion In the diffusion of these new ideas in the way in which we integrate those ideas in our daily lives Innovation is playing a critical role in the global economy and in the new economy more than ever So you are a generation Which naturally grew up in a world where new ideas were continuously developed In a way that people not only on my generation, but also a generation after mine Had no no idea that this could be possible So you are much more acquainted with innovation and new technologies and probably anybody before you At the same time You are the generation who also grew up at the as the first truly European generation And how all this affect Affects you and your region is also part of the discussion. We are going to have So you are prepared and enhance your skills to success in the ever-changing labor market in Europe and around the planet Second you may know it This year we celebrate the 60th anniversary of the Treaty of Rome which created Europe and The 25th anniversary of the Maastricht Treaty that created the Monetary Union and the euro These treaties had a common goal for the future a strong Prosper peaceful and united Europe and All the European institutions including the European Central Bank are working very hard From different perspectives to achieve that vision. I Think you've heard a lot about monetary union monetary policy in ECB. You study our work and our institution in your university You hear about us in the media even in conversation with friends Well, I hope you have better things to talk about with your friends but in any event you may actually discuss ECB sometimes with your friends and even with your families and Now we want to do something that different from We what we usually do usually we go around and we talk. It's us who talk Now this time it's us who want to listen and listen to you your points your observations That's why I asked you to ask us questions And you did we receive questions from all over Europe, of course and from across the world including China and the United States and I have already known that many of you have concerns about how innovation will affect your present and future That you are worried about inequality that you are also interested in finance technology the impact of monetary policy decisions So you talked about dialogues and platforms for you to become more active in social media That's why we started with this initiative and this platform to engage with you and try to address some of your concerns So now I really want to be keep my word and shut up. I'm listening Many thanks president. Thank you. So indeed we're not going So indeed we're not going to turn to you And start with questions the first question is from our host university from Isaac And I'm inviting Veronica, and I'm sorry if I misspell the names Veronica Raquel yes Castro is silver to ask her first question to President Draghi. I Thank you so much Thank you so much for being here. Welcome to Lisbon. My question is should the ECB's Quantitative easing program started or have started earlier alongside the one implemented by the Fed and thank you Thank you I mean this is not it's not an easy question to answer and So my my response will have to be We'll have to be a little longer than I'm sure you and I would wish to be But to be complete I guess we'll have to be a little long because there are many differences between Between the Fed and the ECB They have to do what between us and the eurozone There are structural differences. There are Ways in which monetary policies being carried out by the two institutions and there are differences in the way the crisis Developed in the in both in both parts of the world Let me start from this point from this point at the end of 2007 so it almost ten years almost ten years ago the subprime crisis erupts and The both institutions the ECB and the Fed React pretty much in the same way namely with extreme decision They expanded liquidity in a very forceful way and they Basically hamper the diffusion of the crisis immediately But we were to discover that that was only the beginning of the crisis later on The whole world moves into a state of great and increasing uncertainty But for one year about one year not really a big crisis then in 2009 we have the big bailouts in the United States and We have the gradual discovery that all these products have intoxicated many banks in Europe and We reached the point with Lehman cry the cries of Lehman That is a turning point. That is a turning point and what but how the the crisis in the United States continues to develop and Along the line where the Fed substantially tried to cope with the effects of the crisis upon the economy the United States is a Market-based Economy where most financing goes through the markets The eurozone is a bank-based economy where most of financing goes through the banks more specifically 80% of credit flows go through banks in eurozone in Europe really and only 30 in United States And this is the big first big difference between the two situations In the meantime the Fed brings the interest rates to what's called zero lower bound and then starts QE Because there are no more instruments and the negative effects of the crisis continue propagating in the United States in in Europe in a eurozone something different happens the Uncertainty and the increasing uncertainty or previous years Faces many governments many countries which were unprepared They had they had basically budgets which were very fragile high levels of debt Very little structural reforms. So the crisis morphs into a sovereign debt crisis and in 2010 happened something that really changed the whole picture Because what used we were used to a world where sovereign debt was risk-free and All other assets were priced based upon the risk-free asset price in 2010 this changes and sovereign debt becomes No, no more risk-free. It's risky like any other asset and this changes the whole risk picture Risk pricing picture in the eurozone now what happened also is that our banks Many of our banks in many countries had bought a lot of sovereign debt And so the sovereign debt crisis morphed into a banking crisis So in 2010 already in 2010 the ECB decides to start a reduced version of QE Which was called the S&P Trying to support the sovereign debt market in a way that could be shielded from these big changes in interest rates and prices But the as I said the risk the the crisis morphs into a banking crisis And so by 2000 by the end of 2011 Credit flows were going were dropping were falling very substantially So the ECB decides to launch the long-term refinancing operations Otherwise called outros which meant basically unlimited refinancing at favorable conditions And the four unprecedented maturities of four years Everybody thought this was indeed a big support for the banks and Avoiding widespread failures in the banking system and for a few months this worked But then again the banking crisis sovereign debt crisis took over and what was necessary was the omt the launching of the omt omt Could have been a much much bigger Decision than QE Fortunately, there was no need because markets reacted in a way They recognized that something that they were pricing in namely the fall of the euro was not going to happen any longer So overall the financing conditions improve quite substantially and something that's rarely mentioned is that between 2000 the end of 2012 the to during 2012 and 2013 Something like two million jobs are being created. So the recovery had started already very very slowly gradually but continuously now if we go back to the beginning of 2012 we had something like 16 quarters of uninterrupted growth with an average of 0.4 percent But then once the sovereign cries the banking cries had been kind of slowed down and by the way the fragmentation that had taken place in Europe also was decreasing then in 2014 we Thanks to spillovers from the rest of the world we enter in a situation where Basically, there are renewed cries renewed race for the economy a race of deflation And that's when the ECB responds very much like the Fed did originally namely with a QE so The lesson is basically that Both institutions responded with their instruments to different contingencies during crisis which were profoundly different in places of the world with big structural differences and Also, one should take into account another thing the tradition of Making monetary policy in the two institutions was different in the Fed in a market-based economy The Fed did monetary policy through open market operations namely buying government assets and injecting liquidity or else selling government assets and We draw in liquidity in Europe the main channel since it's a bank based economy was through banks Financing the banks well both institutions actually changed their monetary policy practices during the crisis The Fed moved much more into refinancing and the ECB moved much more into government bonds buying Policies we also added another ingredient that the Fed didn't have which was the negative interest rates, of course Stop here Sorry, but had to be long to have be complete So the next question is focusing on productivity and unemployment It comes from Cyprus. It's not in the room, but it was sent to us via Facebook You have it here on the screen, but let me read it for everyone Dear mr. Draghi, it is evident that investment in capital-intensive production can improve productivity however in countries experiencing economic recession and unemployment like Greece and Do you consider it best to invent to invest in technology directly boosting productivity or investing in the labor force? Leading to a potential long-run increase in productivity and employment instead But let me first observe there is no trade-off between investing in productivity and investing in people If we if we if by investing in people we mean investing in education in skills in human capital I would say that the two complement each other investing in technology It's complemented by investing in human capital But it's also another aspect that we should we should always keep in mind when we talk I hinted that in my introductory remarks when we talk about about productivity and innovation that in especially in Europe Diffusion of innovation it may even be more important than innovation itself in other words There is so much space for the For spreading innovations from the high Highly competitive companies to the ones that are less competitive in Europe We have much much space to do that. How could this happen? However, it can happen only if the environment is growth friendly What does it mean? Well, it means that Should be open to receive the technology It means that one should fight for greater competition for reducing barriers for fighting against vested interests This is what it's an open environment a growth friendly environment. It means that taxation should be growth friendly This is it means that the companies the young small companies Which often are the first the first engines for innovation, especially not big innovation Should be able to find credit Which means to have a relatively healthy banking system that can provide credit with So all this is what fosters diffusion on innovation growth So I see basically no trade-off between investing in technology investing in people But what's important is to create the environment where these investments produce in the end produce growth Thank you We've got the third question coming from Nova University and Jose Elisio da Silva Santos The floor is yours Thank you. Good afternoon, Mr. Draghi. Thank you for being here. My question is We how do we as young economists managers bankers? How can we create these dialogue platforms like this one to become more active more informed citizens? And how can we help other citizens also understand the policy stance? Thank you Thank you. Let's start from from from from a point that is only That characterized your your time certainly didn't characterize mine you have boundless technology possibilities for Strengthening for enhancing your social capacity So technology is not really a limit here And by the way, and it's progressing each and every time and very much of this progress is immediately usable So there are there are relatively at least as far as social diffusion diffusion social views There are relatively few impediments. So next question is Next question is what am I going to do with this? It's quite clear that all this is going to be an energy for good if it produces reliable and transparent information That's the pillar of trust on the other hand if this doesn't happen There is no trust and Then it's a big waste in a sense because you have big possibilities that are not being used So your communication should be geared or should be aiming at producing trust and trust comes from reliable and transparent information to do that There are various things that I mean you for silly to strengthen your social interaction one is to Have a keen interest in social aspects Follow your policy makers track record That's also that's also very very important and in generally speaking is what I said before aim at producing trust I think that's that's the key point today now The fourth question is is again in reality is actually two questions It comes from Finland and we've selected the second part of it It was sent again via Facebook, and I'll read it out. Mr. Dranghi I would like you to share your thoughts on how inequality affects even financial stability Thank you for this great initiative Well, you're welcome Inequality in a quality first of all there is a renewed and welcome interest by everybody in In coping with this issue of inequality after many many years. We simply ignore the issue the globalization the greater competition the Diffusion of technologies to have produced have produced the immense wealth But unfortunately has also have also produced a very equally equally large Crowd of losers of people who are not caught in the sharing of the benefits That's the tip. That's really the main feature in my eyes of inequality It's basically there are people who are not part and parcel of the ongoing the normal ongoing of an economy Where they cannot share the benefits that cannot buy a house buy a car in this sense It's a highly destabilizing phenomenon which touches all parts of our society is including including financial stability now How we all we asked ourselves this question. What can a central bank? What can the ECB do? about inequality for one thing and we Is a certain amount of reflection on this and and thinking about that Well certainly one thing if we are successful at Achieving our mandate which is price stability We help to fight against inequality We have to understand that price stability in this context means to be able to reach a slightly higher rate of inflation You know about our mandate or rate of inflation, which is close but below 2% and we are not there Why is that because it's lightly higher inflation by itself? benefits the debtors Right now a too low rate of inflation benefits the creditors Traditionally creditors are all the people and and debtors are younger people But it's also a much more important way in which the Right monetary policy decisions, but I think I should widen this to any right Right economic policy decision is the best tool against inequality The major source of inequality is unemployment So to the extent that our policies first and foremost, of course as far as I'm concerned monetary policy fight unemployment they fight inequality and That's the key angle as far as we are concerned of course There are many other reason many other ways to fight Inequality and certainly again a hint that that in the beginning education skills Investment in human capital is also one way and of course there are also redistributed policies that we should take into account But it's not for the for a humble I mean central bank owner to suggest What people should do to redistribute better wealth and income, but silly debt also should be taken into account but the key point is what the question was asking at the beginning is it a seriously destabilizing Factor that we should cope and have have in our in our minds. Yes, it is Moving on to a question from University of Catolica, and I would like to invite miss Dina Rodriguez Where are you there to ask your question? Oh, welcome. Thank you for the opportunity. I'm going to read off my phone So I believe one of the issues that most shares public trust in European institutions Is the phenomena of revolving door jobs? Public former public officials quickly taking on jobs in sectors they previously supervised There is an example of the number rose moving on to Goldman Sachs Just after the cooling off period imposed by the European Commission expired Show that on some cases a time a time lag makes little difference to how an appointment is perceived and More transparency is required by the public. So do you think the ECB's framework adequately adequately deals with this issue? Yes, I think so the The let me just Address your question which in all its entirety Institutions institutions always need trust a central bank especially needs trust Much of the monetary policy today is actually always being based on credibility and Credibility is also also based on trust now trust is Is actually the outcome of many many different actions But it's trying to cope with the with the angle that that you have first of all trust comes from communication communication that needs to be transparent and accountable and And We've done an enormous progress in communication We just think about not only not only the ECB but all central banks Just think about that in the if I'm not mistaken in the mid 90s until the mid 90s The US Fed will change interest rates after monitoring policy meetings. I would not communicate to anybody that they did so They would have to learn it from the market now In our case we we we were ready since the beginning the ECB was a very transparent central bank with several press conference after each for each monetary policy meeting and The economic balloting and much communication speech reviews hearings now we continue this tradition We actually enlarged it quite significantly today. We obviously we have also occasions like this one is The whole and the our forum in Cintra is going to be webcast. So it's all very transparent DCB is accountable only to European Parliament. Well, despite of that I started going also to national parliaments interacting also with them and Now I'm getting closer to the conflict of interest thing since 2015 we Publish an account of our meetings of our monetary policy meetings So again, that is also other material that would give people a sense of what we've been discussing my personal diaries and The ones of my colleagues in the board with the meetings we have are also published on a regular basis Also, we have a framework that deals with conflict of interest cool enough periods Rules that prevent basically conflicts of interest what sort of invitations we accept and we don't accept I Almost accept no invitation for example yours. Yes, but others very often I very very often I have to refuse them because they exactly they could be seen or perceived as conflicting with this framework basically or with what people would expect from from a from a Monetary policy maker that would behave so I do think we cope with this Sort of okay, I would say of course we can always do better I'm pretty sure and we learn from Criticisms on occasion and we try to change our procedures whenever we think that a certain criticism isn't warranted or is warranted action Thank you Now we have a question from Germany which is a question by a Twitter Focusing on youth and monetary policy. It's quite a provocative provocative question. And here it goes Mr. Draghi, don't you realize that your interest rate policies make it impossible for Millennials to build up wealth Well First let's talk it depends which Millennials we talk about The Millennials that have found a job because of our monetary policy, I'm pretty sure they are okay with this policy so I got To distinguish between different types of Millennials here now There are also Millennials who save money or more likely they are sons or daughters of Millions of non-millennials of people who are true savers and And so basically are your parents your grandparents and so on and I've said it many many times this let's not forget the savings comes from growth And if there is no growth there is no savings and interest rates have to be low for growth to recover so When growth will recover and when inflation expectations will show that a convincing trend towards our Objective interest rates will go back to be higher and at that point savers will also have their returns But if we were to raise interest rates at the wrong time We would simply produce another recession and recessions aren't good for anybody Savors and non-savors Also, let me add to let me make also another consideration Millennials are probably too young to buy a house but for those slightly older than Millennials who also have to Go and buy a house and they need a mortgage low rates are very good They are very there's something they really cherish in other words We got to be patient the savers of the core countries would like to see a bigger return to their savings They will see that in due time in the meantime We have to make sure that inflation will converge again towards our objective and the economy will recover So let me turn to the floor to Joe Pinto from Ishte Joe Good afternoon everyone Present Draghi as advanced economies struggle with output below potential particularly since the global financial crisis severe challenges are facing the coming decades One of the most intensely debated among researchers is productivity growth In fact productivity, which is the ultimate engine for economic growth is been exhibiting in recent decades a downward path Persistent which clearly undermines growth prospects Given so my question will be what is your view on the origins or the sources of these current global low productivity trap? Is it a cyclical downturn or a long-term phenomenon? Thank you very much. Thank you It's a it's a it's a very difficult question on on which there are there is a variety of views and no no hard understanding of of the real reasons The cyclical downturn in productivity really started Well before the crisis The great crisis then of course with the crisis Investment went down Also investment in everything went down Capacity utilization rates went down Expectations of future investments went down all this only increased the downturn in productivity and But there is also we have to look at the trend also the trend in productivity is not Is not Something that we would like to see now again, I kind of Say again what I said before Much of this is also as far as special Europeans are concerned deals with diffusion of technologies and That's where I think with that's the first action that we know for sure it produces increases in productivity namely Create an environment where diffusion of technology is easy And I went through some indications that how on how this could be achieved before So we've now got a question coming from quite far away via LinkedIn from China and it's relating to one of the topics you mentioned I'll read it out. What is the impact of fintech to traditional finance industry? Would the ECB put more resources to the high-tech development? well we ECB certainly supports financial innovation fintech We've started in the last year and a half Several streams of work the most recent example is something we decided a week ago to Start on the on a project called instant payment whereby consumers and firms can transfer money between them instantly 24 hours a day for 365 days and That that is the last example We also Do support the distributed ledger technology? That's quite another important very important development where you basically Can store information on a decentralized base? And more generally we have we have a sort of great attention to these these developments for a variety of reasons first of all because they improve and to some extent may even strengthen the financial system against cyber attacks and And the other reason is related reason really is that Cyber crime is a major danger for financial stability and More and more of this will will have to be will have to be Coped with by by supervisors in an in an effective way There is been the last g7 ministers finance ministers and central bank governors meeting dealt with this explicitly There are several task forces that are working actively on this point on this. This is part and parcel of fintech Really so generally speaking great attention strong support also concerns for the efficiency and The safety in the use of these new new technologies We're not moving to Thomas. They'll made a dos Santos of Nova University Professor to Dargi. Thanks for your presence a question about banking system In the last 10 years Portugal spent with bailouts more than 10 billion euros to have a sense of scale for the for the Portuguese economy is this almost is around the total money that Portuguese government collects from in income taxes personal income taxes, so it's a lot of money So my question to you is what exactly has been done over the last years to make sure that this will never happen again So that's our tax money will not be spent with banks. Thank you Thank you. Well, think of a Germany spent about 11% of their GDP in bailouts So it's also it's partly in reaction to these very big bailouts very significant bailouts where taxpayers money was used to Exactly bailout Banks creditors bank depositors bank shareholders. It depends which one which bailout example we are talking about it's because of a spudly partly I would say to a great extent in reaction to these developments that the European Union Adopted a directive called the banking resolution and recovery directive where basically the conditions are For a bailout are much much more difficult to comply with so that whenever we have a major Banking episodes a banking crisis The there would be first and foremost a bailing of the shareholders and certain categories of creditors And then for the rest if this is not enough the rest would be coped with by banking resolution funds Now This is now we've been we've been having this directive for a few years There we've we've had several crisis around now the main the main purpose of the directive is to make sure that we That basically the use of taxpayer money is taxpayers money is Minimized but also that the bank activity is preserved So that the failure of a bank doesn't involve the destruction of the banks activity With also the waste of resources that this implies Then now it's been a few years that that this director's been in place Can we say that it's actually performed successfully? Well, I think it's it's really too early to say it's too early to say we had we had many Episodes that ended up in a way perhaps that the creators of the directive didn't expect others did The so it's just early to say the resolution this the the resolution board is a new Institution which is also important for the application of this directive But one thing is pretty clear and we that's one lesson that would apply without uncertainty Banks have to increase their own means have to increase have to Put aside resources that are capable to absorb losses in case of a crisis And we had at international level and measure that's called T luck Which has been transposed in some extent by and large in a in a in a measure in Europe called M REL and basically asking banks in the European case all banks in the In the rest of the world case only the largest banks to set aside resources that are that are easily mobilizable in case of losses in case of a crisis I think that's the best way to make the BRRD the directive a credible measure that would end up minimizing taxpayers money in the case of crisis And then we had another question from Spain coming via Facebook Dear mr. Draghi, I'm a fourth year medical student And I've seen how most of the innovation in the medical field occurs outside of Europe in your opinion Could developing a more innovative medical sector contribute to the improvement of our economy? well I'm hardly an expert in that, but I Assume that that This is true. Namely the much innovation happens in the United States. I don't know it for sure But silly things that have improved in Europe with respect to this but again, let's ask ask what Suppose let's assume there is a problem there. How would a policymaker in Europe cope with this problem? Not not from a scientist not from a scientific viewpoint, but from a policy viewpoint Now one should ask what are the reasons for this lag in innovation in the medical sector? What is the regulation that? Overseas Innovation in the medical sector. Can we do better of that? What is the diffusion process? How difficult is to spread around medical innovation in in Europe? What are the? Experimentation rules which are crucial in obviously in medical innovation So these are questions that I can only ask. I'm certainly not able to answer them Thank you So we have one last question from University of Catolica. So let me invite Ricardo Rodriguez Where are you to ask your question? Good afternoon. I would like to thank you for coming here. Thank you. And now mr. Draghi. I would like to ask you You and basically the ECB How do you conduct policy in an environment where are different countries at different stages of the recovery process? Which individually may require different measures or even opposite measures to foster Productivity and innovation. Thank you Thank you. Now, of course, let me let me premise saying that we really do only one We don't have different countries. We have only one eurozone So our monetary policies for the whole of the eurozone but to to give you a Say a more a more substantive answer to your question Let me make a comparison with the United States in US you have different states and they go at different speeds and Like like any other part of the world, you don't have everybody marching at the same rhythm No, we'll be boring and one other things but but you have they go at different speeds Now different speeds may cause this equilibrium imbalances Now this is being mitigated in the United States by the fact that they there is a federal budget So there are transfers across different parts of the US To compensate the possible imbalances that would come from moving forward at different speeds Our union is not a transfer union. That's what the master treaty stated So we don't have a federal budget We have other ways to partly mitigate these imbalances that come from different speeds But that's why that's why in the eurozone Convergence namely the capacity to try to aim at going at the same speed It's fundamental It's fundamental. So it means that countries shouldn't go at the same speed But should go at some at speeds that do not create major imbalances and that's called convergence that's called convergency and I think that to some extent great progress has been achieved on on their ground since since the master treaty one one interesting and certainly welcome data that we can extract from the variety of data that we have on this ongoing recovery is That the degree of divergence between different countries and I'll say in a moment Actually, what do we mean by that? Well, we look at value-added Value-added growth growth of value-added in different countries and then we calculate a dispersion index of this growth in value-added and Nowadays, it's at historical minimum It's actually the the same dispersion we had in 1997 so it means that Efforts towards converging is there, but it should also be convergence as far as policies are concerned Namely again, I go back to structural reforms are important And what you want to see is the countries converging their policies Aligning their structural reforms to the best practices That's very very important for the resilience of the monetary union. It's one of The two pillars upon the monetary union is based Convergence and the second one is trust And what we are doing exactly at this point in time is try to strengthen convergence and Repair and strengthen trust as well. I think the keynote here is Strengthening trust and with that I would like to thank you. Thank you And I am now going Please We've mentioned it's extremely important for us to have your views just by seeing all the questions that we're getting it Helps us. This is the beginning of more of a challenge that we want to have with you That's why I wanted to make sure that you're aware of a of the next Competition that we're going to do we're going to work with the foundation of the University de Lyon for your video challenge because we know very much We're still in prints, but you don't read that much. Maybe you're an exception people watch videos And that's what we need to work on as well So we'll be focusing on this in the summer inviting you to participate and with that I would close our parts and hand over to governor Carlos da Silva Costa the governor of the Bank of Spain of Portugal The Portugal and invite you for your remarks. Thank you Hector Professor and Tony Kluserra. Let me make in a very short Closing for points and previously to introductory notice the first one is to Say that it's a great pleasure and satisfaction that Bank Portugal work do ECB and Lisbon school of economics and management to organize the first ECB use dialogue in Lisbon This seminar provided an important opportunity for economic students put questions to DCB president mr. Draghi and To get Clarifications and issues that concern them There's this initiative clears demonstrates DCB endeavor to be an open institution that is closely Linked to the society in a particularly the European use. Let me add a second note that is personal for me It's a pleasure to be at closing this session because I was a long time ago during six years vice chair of European wide sink sank on the future of industry manufacturing in Europe and We were discussing a lot about innovation About employment and about use and to have the opportunity to close this session is also a way of going back 15 years in my own life To turning now to the topic of this dialogue use innovation and productivity in Europe I would like to start to By pointing out that we live in a challenge the world both in social and economic terms But these should not be as a negative factor because If prepared for and overcome Challenge lead to progress Let me conclude to say without that is necessary to have in mind for ideas force Ideas for ideas that are very important first innovation is a continuing process Or even a state of mind. I prefer to say a state of mind It should be not forgotten that sometimes innovation requires long-term research periods and it's the answer to the medical Research that we need to promote reaching up to 10 or 15 years Support for long-term research is necessary. It can be hardly be provided by firms and It is now important to understand that is a public good that needs to be provided by your opinion Secondly the pool of startups is important because it constitutes the cradle of successful firms of the future Never lets the early failure of most of these firms should not be taken as problematic The high mortality rate of startups is to a large extent the result of a natural process of selection of good ideas and efficient firms by the market forces The problem is to stay with them in Europe and sometimes we lose them after being successful Therefore public bodies and public policies target at supporting startups That they have not been proven able to compete in the markets are expensive and clear not efficient But we need to go ahead with the right institutional framework in order to select the right startups and successful ones Certainly and the as a follow-up to the previous point the financing at the radical innovation of startups is Not the primary whole of the banking system and we need a banking system for the firms that are already Doing well, but we need also financial instruments for Startups and we miss them in Europe the high levels of risk involved to call for the intervention of specialized operators for instance venture capital or business angels Unfortunately in Portugal and I will say in Europe these operators are still not sufficiently developed and possibility of ventures with larger foreign partners is limited and I will Remember that we need to put also a lot of emphasis on that point when we speak about Junker plan if there is no radical innovation there will be no future and there will be no radical innovation without the right institutional setup Finally and forcefully the challenge in Portugal is to speed up the pace of reform and further more denies its firms Only high performance firms can afford to pay the wage of those that make difference in terms of innovation and entrepreneurship Although foreign experience by young people a skilled co-workers is beneficial It should not be a way of promoting a brain train However, as the initial said challenge should be seen as opportunities to improve not as problems and the the most important problem is to create or most important challenge is to create the right institutional framework in fundamental research in promoting the venture capital and the venture and speed the process of Startups that are successful and after to ensure that these startups have the right Environment to grow and to be successful big companies in future Thank you very much president to come to Portugal. Thank you very much for your explanations and if he there if there is something that comes from your intervention is that the banking System is not far away of the real economy and the central bankers are not far away Of the banking system and real economy. Thank you very much