 So we are coming to the end of this conference but it's not quite the end yet because we'll have the privilege and pleasure to listen to Jean-Tierrault at lunch. I still have a few remarks and before I start my remarks, let me say a quick word of thanks. Actually, three words of thanks. The first thank you is to all of you coming today to this conference. It means much to me to see people traveling from far away. Yesterday night I joked from far away, even from France for today's event. I'm really honored. Second thank you is to the speakers and chairs. That was an incredibly insightful conversation. I was really struck and even shocked by some of the remarks. I mean, Ellen's remark that the world may be kind of split between the Fed taking care of the global financial cycle, PBOC taking care of the global trade cycle, and what does Europe do? Well, we don't know. That was kind of really capturing a lot of the issues of the day. I would maybe just like to kind of qualify or mitigate some of the suggestions about causalities, like the causalities between my speeches and the tweets of the President of the United States. I think that's really far-fetched. But thank you very much for putting together this great discussion. And the third thank you is to those who helped organizing today's event. Organizing such an event, I mean, that seems pretty easy when you come and sit and listen. A little bit less easy when you come and sit and speak. But it's a lot of work. It requires lots of help and input by lots of people. And although it's impossible to name everyone, I would like to thank four persons in particular, Alessandra de Magistris, Antela Lenya, and my two assistants, Lucille Germambon and Ina Gauking, for putting together today's event and making sure that everything runs smooth. So in a few days, I'll leave the ECB after eight years of unprecedented challenges for the integrity and stability of the euro. Throughout these years, the ECB's resolve and steadiness have been the cornerstone of Europe's crisis response and economic recovery. And I feel grateful and humbled to have been given a chance to be part of this effort. I would like to thank former President Mario Draghi. I would like to thank very much my present and former executive board colleagues. And it's really nice to see all of you here, Vita, Peter, Jörg, also, et cetera, and all the governing council colleagues. And for the President, Christine, it comes at the end. So don't worry about that. It will come. And I would like to thank the staff of this great institution for their friendship and trust. Starting point for my remarks this morning. And you will see that it kind of brings together a lot of things that you've actually heard on the first, on the two roundtables. So there are lots of echoes here with what we've heard this morning. But the starting point for my remarks is the sense of frustration and people's sense of criticism of central banks for failing to deliver inflation consistent with our aim. And the criticism of central banks has taken several forms in society. Professional observers, financial market participants often criticize the inadequate size of our action, the question, the effectiveness of our instruments. We've heard a little bit of that this morning. Private citizens criticize the type of instruments we use, in particular asset purchases, negative interest rates, which are very much under fire around us as we hear today. And the side effects that they associate with these instruments. The use of these instruments has caused persistent mistrust, while three in four, three in four, your area citizens think the single currency is good for the EU. So 75%. Two in three think it is good for their country. Less than half of citizens trust the ECB. It's not new here, but you see this gap between trust in the currency and trust in the institution. And so in my remarks this morning, I would like to make two points that speak to these concerns. The first point is that there is no contradiction between inflation being low and monetary policy being effective. Central banks have achieved great success in recent years. Their achievements, however, and this will be my second point, are of little avail if the public does not recognize or understand them. So it's a lot about the connection to the public. And I will argue that what I would like to call the veil of effectiveness creates enormous challenges for the credibility and acceptance of central banks. Challenges which can only be overcome by revisiting the appropriateness of components which are at the heart of our current monetary policy framework. Namely four components, how we define possibility, how we measure inflation, how we evaluate the credibility of our intentions, and the range of counterparts through which we implement our monetary policy. So going also into the instruments. So let me start with how to square low inflation with policy effectiveness. And that centers on two separate questions. How should we, we, the central banking community, evaluate the effectiveness of our own actions? And why, despite years of extraordinary policy support, is inflation remaining stubbornly low? And evaluating our own actions is surprisingly difficult. There is no handbook, no checklist that we can use to consistently grade our actions. Ultimately, of course, there can be only one yard stick to measure central bank effectiveness. We know that, and that's our track record in delivering inflation consistent with our aim. But does inflation failing to converge mechanically to our aim imply that our actions have not been effective? And the answer is no. Despite unprecedented challenges to monetary policy implementation, central banks have succeeded in delivering financial and monetary conditions that are exceptionally supportive of real economic activity. Many euro area firms currently borrow in financial markets at negative rates. Bank lending rates, also for small and medium-sized companies, are currently at or close to historical lows with little dispersion across major economies and across the eurozone. Firms have responded to these incentives as economic theory would predict. Over the past five years, real investment has expanded at a faster pace than in the five years preceding the global financial crisis. This is no small achievement considering the persistent uncertainties that has waited on sentiment in recent years. Investment in turn has boosted job creation. Employment is up by 7% compared with mid-14. And in many eurozone countries, wages are growing at the fastest pace in many years. So, all in all, ECB staff estimates show that without our policy actions, your area of real GDP would have been up to 2.7 percentage points lower at the end of last year, 2.7%. And inflation would have been up to half a percentage point lower every year over the past four years, 0.5%. So that's about the counterfactual, right? And as economists, we love counterfactuals. And such counterfactuals based on the right range of models are important proof that monetary policy has been effective along the full chain of transmission from financial market prices to economic activity and from the real side to the nominal side. For everything we know about policy, about how policy propagates through the economy, inflation today would be significantly lower in the absence of our actions and maybe even dangerously close to deflation. But such counterfactuals are far too complex to lend true credibility to our actions outside of our now circle, but outside of this room by and large. This still raises the question as to why policy support has failed to promote a more robust convergence of inflation, two levels that would allow normalization of policy, that would allow graduating instruments that have caused mistrust and concern. And there are two broad hypotheses for why this might be the case. So why inflation has not converged in a more robust way so far? The first range of hypotheses is that policy has been wrongly calibrated. That is, slack is larger than widely assumed. Policy should be even more accommodative and you find that in the public discussion. And it's true that the output gap is an elusive concept that actually should never have become a gouge for conducting public policy and it may be larger than thought. And I could expand on using the output gap for fiscal surveillance, but that's not the topic I'm addressing today. And there is a lot to say about that. And broader measures of unemployment that include, for example, involuntary part-time work remain well above headline unemployment. So there is a discussion on the measure of slack. But even these measures are no longer higher than they were before the crisis. And I would also dismiss the assertion that the relationship between output and inflation has broken down, so the Phillips curve. A plethora of empirical studies proves that the Phillips curve is alive and well. So the second, in my view, more plausible explanation is that the Phillips curve has shifted inward over time. That is, inflation today may be lower at every level of the output gap, whatever it means. Such shifts typically relate to persistent and slow moving changes on the supply side of our economies, where monetary policy has less traction. As such, they are difficult to detect. They are even more difficult to prove, in particular when they coincide with weak aggregate demand. But collectively, their impact on wage and price inflation is difficult to dismiss. Just consider the structural changes in global energy markets where the shale oil revolution has effectively put a ceiling on oil prices by increasing the responsiveness of oil supply to demand shocks. Think of the secular decline in wage bargaining power that contributed to a significant part of recent productivity gains no longer being distributed to labor, with adverse consequences for real disposable income, consumption growth, and ultimately inflation. Or consider the salient impact of digitalization on the pricing power of brick-and-mortar firms, which may have contributed at least in part to the recent decline in the path through of higher wage costs to consumer prices. So these are all supply shocks. Add to these shocks the effect of aging, the rise of services, the broader effect of globalization. And it's hard not to conclude that the combination of these shocks is likely to have put a lead on inflation in recent years and that these shocks are likely to constrain price pressure also in the near future. And all of it is necessarily bad news. Many of these shocks are in fact benign in the sense that they have the potential to ultimately lift productivity and real wages and pave the way for the low-carbon economy. Central banks clearly need to step up their research and modeling capacities to understand their joint impact. But, so that looks all nice and benign. But until this happens, and the pace will depend a lot on our broader economic policy framework, which I'm not discussing this morning, but of course there are many things we can do in Europe to accelerate this transition. Until this happens, central banks are likely to have to navigate in a low-growth, low-inflation environment with a risk of repeatedly failing to deliver inflation in line with their aim. So what then can we do, or should we do? I should say actually, what then should you do? Can you do or should you do in this environment? So let me propose four elements for future reflection, how we define prestability, how we treat inflation expectations, how we measure inflation, and how we implement monetary policy. And some proposals, as you will see, are more far-reaching than others. But all share one aim, to bring monetary policy closer to the people, to dismantle the veil of effectiveness, which I've mentioned earlier, and to foster acceptance of policies and instruments that too often are used as scapegoats for shortcomings and deficiencies elsewhere in the public policy apparatus. So let me start with prestability, consider first the ECB's definition of prestability as inflation rates are below but close to 2%, as we all know. A simple answer to the current challenges would be to lower the inflation aim. But if my dissection of the current drivers of inflation is vaguely true, if I'm vaguely on the right side, then it's clear that this strategy would be wrong on many levels, to lower the target. It would misjudge the current low-inflation episode as permanent and thereby dismiss the lessons of history on the slow pace of diffusion of new technologies. It would create perilous time consistency challenges for central banks when inflation eventually transitions to the new steady state. And it would shift the disproportionate share of the macroeconomic adjustment burden in Europe onto workers as even more so than today, shocks to eurozone economies would have to be accommodated by lower nominal wages if we would lower the inflation objective. And that's really not the best way to foster support for Europe and to foster support for Europe's single currency. So what about raising the aim? Why? That, in my view, would be similarly misguided. Why raise a name that you have failed to achieve in the first place? I will come to this debate with a different angle. If we communicate that we aim to maintain inflation at, say, 1.9 percent and that point was raised on the first panel. So if we communicate that we want inflation to be at, say, 1.9 percent or 1.95 percent or maybe 1.97 percent then we shouldn't be surprised if the public expects us to control inflation up to the first decimal point or even the second. This significantly raises the bar for maintaining the credibility of monetary policy particularly given how little the public actually knows about inflation and how little the public knows about monetary policy. So we need to dismantle the absurd idea of an omnipotent central bank that can mechanically steer inflation. ECB should clarify that it aims to deliver inflation of 2 percent over the medium term. It could communicate a range of inflation outcomes that can be considered acceptable in normal times and such a tolerance band which can be more or less precise so I'm not venturing into practical propositions here, that's not my role but such a tolerance band should not be an invitation for inaction or for complacency because of course that's the answer. That's the objection that can be raised. Research shows that central banks have a strong incentive to already respond to inflation deviations within the tolerance zone so there is a kind of honeymoon effect if you want to put it that way rather than waiting until inflation has crossed the edges. So of course I'm not saying that there should be some kind of a stepwise answer of monetary policy when we cross the limits of the tolerance band. This should be a continuous answer and there is no convincing evidence that the tolerance band weakens the anchoring role of a midpoint. It rather recognizes a large and inherent uncertainty surrounding price and wage decisions. It conveys this uncertainty to the general public and its elected representatives and it establishes consistency with the medium term horizon of the ECB strategy. But for this change to be effective, two elements are critical. First, the ECB will need to do more to communicate the midpoint to the broader public. That point also was raised this morning. A recent survey in the US showed that only a quarter of respondent households knew of the Federal Reserve's 2% inflation name, only 25%. We're aware that there was even a 2% objective at the Fed. And second, the ECB will need to establish a clear track record that emphasizes the centrality of the midpoint in the conduct of policy which of course can only be built over time. The 2% needs to remain the clear nominal anchor for coordinating both expectations and actions. Which naturally leads me to inflation expectations. How is that going to be perceived by the public? The second element we should review relates to how we should evaluate expected deviations from the midpoint target. Critics would dismiss the idea of tolerance bonds around the inflation aim because they fear that by signaling our comfort with a range of inflation rates below 2%, we would entrench expectations of low inflation and risk downplaying as a nominal anchor. And I have two comments in response to these fears. First comment is that we can no longer ignore the fact that medium term inflation expectations of both professional forecasters and financial market participants have persistently adjusted lower. Adaptive expectations are rational at times of deep social change. So we're beyond that in a sense already. And my second comment is really more of a question. Which expectations should central banks consider when evaluating risk to the inflation outlook? Neither the academic community nor the central banking community have ever provided an answer to these questions. I see a large gap between the role played by inflation expectations in our profession and the extent of our actual knowledge of how expectations ultimately affect inflation outcomes and which expectations are concerned. Market-based measures are convenient because they are readily available 24-7 real-time. But convenience may prove delusive. Household inflation expectations, for example, have been found to be a better proxy of firms' pricing decisions than those of professional forecasters or financial market participants. And that's the Coybon and Gordy-Chanko paper which was mentioned earlier. Expectations by households have pointed in a very different direction in recent times, painting a much less dire picture regarding the inflation outlook. According to one survey, households believed that annual eurozone inflation between 2004 and 2018 was close to, guess, number? Nine percent. Well, in fact, it was 1.6 percent. So I'm not saying we should take that number, obviously, but I'm just saying that we need to kind of give more thought to understanding a broader range of inflation expectations and not focusing too narrowly on market-based expectations. Next question, does the measure itself, does the consumer price index need to be changed? So that's about the way we measure inflation. The harmonized index of consumer prices, HICP, has been a tremendous achievement in terms of providing a reliable, timely, comparable measure of consumer inflation across European countries. But whether it adequately captures the cost of living should be subject to regular review. And a well-known discussion is around the cost of housing. The HICP captures only marginally what's actually the largest single lifetime expenditure of households, which is the cost of housing. Housing costs currently enter the HICP, mainly through actual rents with a weight of 6.5 percent. And the cost of owner-occupied housing are not included, even though more than 65 percent of households in the eurozone own their main residence. And again, there is no easy answer. I'm just saying that we should always make sure that we're using the right measure and allowing a wedge to persist between the inflation that households actually perceive and the rate we officially measure and we use to do monetary policy that can undermine the validity of our actions. Re-evaluating the appropriateness of these three elements, the inflation aim, the role of inflation expectations, inflation measurement, would already go a long way towards revitalizing policy in line with the current challenges. It may not be enough. In the current environment of persistently low underlying inflation, elevated uncertainty, if that environment were to persist well into the future and there is a risk it may, then the odds are large that firms and social partners will increasingly start adjusting prices and wages accordingly. And in this case, more forceful policy action would be needed. And then what do we do? One option would be to do more of the same. I have noted that the ECB can further ease financing conditions by deploying its current instruments, by drawing from its current toolbox. But one may doubt whether this approach would be more effective in bringing inflation closer to the aim than it has been so far. And one may wonder how far the depth of our shallow capital markets can be sounded and whether the side effects of our measures would not outweigh the benefits at some point in the future. A second possible and complementary action or option is to coordinate economies policies more closely. So that's the discussion which is all around us on, you know, let's pass the baton to fiscal policy, right? I'm a little bit skeptical about that. The combination of limited fiscal policy space in many Eurozone countries. The political fixation on large fiscal surpluses in other countries. The persistent opposition to a common fiscal capacity in Europe makes this option not very credible, honestly. And coordination with fiscal authorities should not be a fig leaf for Central Bank inaction or inability to act. And it can easily degenerate into a threat to Central Bank independence. But Central Banks have one key strength and that's their agility. They've always been able to reinvent themselves to innovate and overcome even severe impediments to monetary policy transmission. And if transmission through financial markets and banks hits a wall, if the third stage of transmission remains anemic, then Central Banks have the obvious choice of considering whether to broaden the set of counter parties through which they implement monetary policy. And the discussion about digital currency which you just had on the second panel is a case in point. At the heart of this discussion is the question of whether Central Banks should ground the general public direct access to their balance sheets. This question comes with many thorny technological choices and policy challenges, political challenges like anonymity is clearly a political discussion. Also policy challenges in regard to financial stability, in regards to the future of credit intermediation which are now being discussed in the official community. And there is no easy answer. But assuming that these challenges can be overcome, then there are few reasons why Central Banks within their mandate should not apply the same set of instruments to accounts of private individuals that they currently have. That is charge interest on Central Bank digital money. And by going to the heart of consumer choices this approach would likely be more effective and faster in stimulating demand and inflation and it could have less negative side effects. So to put it in more nerdy terms rather than addressing the symptoms of low inflation this would amount to precision surgery at the heart of the Euler equation which we are not doing today. And none of this is to say that it's trivial. Ultimately Central Banks will need to weigh the costs against the benefits just like we did for other unconventional measures. What we should avoid however is restricting our toolkit for dogmatic reasons or intellectual convenience and giving up on our ability to deliver on our mandate. And if monetary policy remains a conversation between Central Banks and financial markets we shouldn't be surprised if people don't trust us. Too many see us as part of a financial system which has failed to deliver growth and fairness and this also curtail our policy options. So let me conclude. Technological progress will continue to transform monetary policy in the future to what extent in what ways will depend both on the preferences of society and the risks that a very protected period of low inflation pose to macroeconomic and financial stability. There will be evolutionary changes that will ensure that current and tested policy frameworks remain fit for purpose. These changes may include, as I discussed progress on how we measure inflation and on the evolving consensus on how we define pressability. And there will be revolutionary changes similar in scale and scope to the shift from bank notes to bank deposits a few centuries ago or the recent adoption of negative interest rates. Technology will create new policy choices and options enabling Central Banks to continue acting within their mandates. As Mario Draghi said at his last press conference, never give up. So I wish Christine Lagarde and her team the best of luck. I fully trust that she will find the wisdom and courage to act in the face of ever-changing conditions as the ECB has always done in its history. Thank you very much.