 Good afternoon and welcome to today's IIEA event. Particularly welcome to our speaker, the central bank, Gabriel McLoef. The governor's talk today entitled COVID-19 and the future of monetary policy could hardly be more timely. It is a subject of immense importance given the central, radical and almost unprecedented role central banks have played in managing the economic emergency of the past six months. Something which in turn has been so important in facilitating governments in their handling of the health emergency. Before handing over to the governor a brief intro, Gabriel took up his position as governor of the central bank of Ireland on September 1, 2019. He is a member of the 25 person governing council of the European Central Bank, a member of the European systemic risk board and his Ireland's alternate governor at the International Monetary Fund. Before joining the central bank, Gabriel was secretary to the New Zealand Treasury from 2011 to 2019. I was also the New Zealand government's chief economic and financial advisor. Please note that the entire event today is on the record. Submit your questions via the Q&A function on Zoom at the bottom of the screen and please identify yourself and your affiliation when putting in your question. So with that, thanks again for joining us Gabriel and over to you. Thank you very much Dan, Cura everybody, Diaghiv. What seems like many, many months ago, in April in fact I started a blog and in my first post I wrote that COVID-19 would be the main theme that I'd write about over the subsequent few weeks. Back in April I suspect many of us were hoping that the pandemic would be relatively short-lived and we know that things haven't quite turned out that way and as we start to learn to live with the virus I'd like to talk today about the pandemic's impact on the economy and the implications for monetary policy in particular. The response to the pandemic has had a significant impact on the current economic activity and it's increased uncertainty about the future. Undoubtedly the pandemic will also leave a legacy of structural change some of which will be an acceleration of trends already in motion and some of which is as yet unclear or perhaps even invisible. We are already experiencing changes which could have profound and long-lasting implications for the way we live, work, consume and communicate. These times of destruction can pose significant challenges as we all know but there can also be an impetus for progress and for policy makers. It's important to adapt to the new world by minimising the costs of any transition and ensuring that our strategies remain effective. And by coincidence my ECB governing council colleagues and I have embarked on a review of our monetary policy strategy the first in 17 years. The environment in which we started the review is of course very different to what we're facing today and I suggest what we're likely to face in the future but in times of calm and in times of crisis our mandate remains constant. The maintenance of price stability and without prejudice to that to support the economic policies of the European Union. And to fulfil our mandate we need to ensure that our monetary policy measures transmit smoothly across the Euro area as a whole. This transmission can be impeded by a number of factors such as risk aversion across national lines an incomplete banking union and the absence of fully integrated financial capital and credit markets. And crises can throw these factors into sharp relief and can even alter the framework in which we operate. It means that when making policy decisions we need to consider our mandate as well as the prevailing macroeconomic and institutional framework and any structural shifts underway in the economy. Our strategy review is an opportunity to take stock of such shifts and how the operating environment might have changed including as a result of the pandemic. And I mentioned some of these issues back in February in a speech in Berlin. The interplay between monetary and fiscal policies as outlined in an economic letter we've just published is always important but it's certainly become more pronounced with a pandemic. Moreover, while many structural forces are beyond the control of monetary policy they nonetheless have a significant role to play in this transmission. And the unusual nature of the recent shock certainly raises some interesting questions such as will the pandemic have lasting effects on the pace and shape of globalization? Have global value chains been irreparably damaged? What does the acceleration in digitalization imply for labor markets, for growth and for productivity? Will the increase in e-commerce lead to more price flexibility and how well do our measures capture price developments felt by consumers? And I want to provide some reflections on these issues today. In simple terms, the crisis has shone a bright light on globalization's costs and benefits. First, firms are likely to take greater account of tail risks resulting in supply chains that are more local and robust. Second, the accelerated pace of digitalization will change how we live, work and spend and is relevant for the conduct of monetary policy. The pandemic increased remote working and electronic payments but reduced in-person services such as retail and travel changes that may outlive the virus. Third, as price stability is central is the central bank's primary mandate in the euro area. I want to discuss how the crisis affects inflation and how we measure it. Given the complex web of supply and demand changes, demand effects at play, interpreting the outlook for inflation can be a challenge. Each of these trends will have implications for the natural rate of interest for consumer behavior and for the structure of the economy. And my colleagues and I are any government councillor particularly interested in listening to the views of people from all across the euro area. And there's a portal on the ECB's website, the ECB listens portal, which enables people to tell us what price stability means to them, what their economic expectations and concerns are, what issues generally matter to them. And I'd encourage everyone to fill out the survey before it closes at the end of October so they can have their voices heard. But let me start with the issue of globalization, an important topic at the Institute of International and European Affairs and one that I have been interested in for some time. Now across history, globalization and pandemics have been tightly intertwined. Indeed, the word quarantine derives from the Latin quadragenta and the more recent Italian coranta, meaning 40. Used during the Black Death when ships, their passengers and crew were isolated before going ashore. The very nature of a quarantine to prevent the spread of a virus restricts the movement of goods and people and inevitably has an impact on the trading of goods and services in an interconnected world. It happened during the 17th century and is no less resonant today. Perhaps the difference over the centuries is that the rise of global value chains has increased the contagion of any shock in terms of both the extent and pace of interconnectedness. It's clear over the past few months the global flow of goods, services, capital and people interacting with the pandemic and indeed contributed to the spread of COVID-19. Both the pandemic and the ECB strategy review provide an opportunity to consider the question of what we mean by globalization. For me, it's all about interconnectedness. Globalization can be thought of as an interconnected and integrated system across the world rather than just the sum of individuals, firms and financial markets. Global interconnectedness is reflected in the multi-dimensional ebbs and flows of goods, services, capital, labor, ideas and knowledge across national borders. It offers benefits by allocating efficiency and risk sharing across the world. But as this crisis and other global crises have highlighted it also increases the potential for the cross-border transmission of shocks, the strategy review provides the ideal opportunity to increase our understanding of globalization and its consequences for our monetary policy. Shifts in globalization are not new phenomena. The first true wave of modern globalization distinguishing from the activities of the Phoenicians in 1500 BC or even when they apparently traded with Ireland in the 8th century BC materialized in the 18th and 19th centuries emerging from the industrial revolution and innovations of transport which is the steamboat train networks. This is interrupted by the two world wars in the 20th century but the end of World War II combined of advances in transport with the plane and car in particular and the fall of the Iron Curtain gave way to another wave of globalization. In the accelerated pace of interconnectedness witnessed over the past couple of decades comprises further waves and reflects a number of key developments. Advances in technology, telecommunications, transport, and most notably the internet itself reduced the transport costs of goods and services. They also facilitated the increased flow of information across the world. Even less sophisticated inventions that surfaced during the mid-20th century such as the shipping container reduced significantly the costs and resources of shipping goods internationally. And these developments combined with financial liberalization and innovation increased international economic and financial integration that would have been inconceivable in the earlier waves of globalization. In the 21st century of course one of the most notable economic developments has been the integration of China and its rising prominence in the world economy. Global interconnectedness has been with us for a very long time and in my view is here to stay by the pandemic and mask the fragility of the modern global supply chain. Just as the financial crisis revealed the susceptibility of the global economy to systemic risk in 2020 trade across the world declined abruptly. Multinational firms were faced with a supply shock due to factory closures and social distancing constraints and they faced the demand shock to the ground to curve and see the purchase as we all know. And the concentration of China in global value chains combined with a shutdown of its factories created obstacles to its trading partners. Increased trade protectionism and the tariffs that have emerged in recent years had already led firms and governments to reconsider global supply chains. The pandemic has accelerated a revisit of global production processes and supply chains. Global trade and international capital flows matter for monetary policy and any changes brought on by the pandemic will likewise have an impact on the economic environment in which central banks operate. Greater global interconnectedness increased the importance of international prices relative to domestic prices meaning that inflation became relatively less sensitive to developments in the domestic economy. Moreover, as common shocks propagated over complex value chains and monetary policy frameworks converged inflation across the world displayed a common factor. These trends altered the relationship between inflation and economics lack as described by the Phillips curve and while the effects of globalization on inflation can vary across countries and time it's important to consider it and work that allows such key parameters to change over time. The importance of understanding and forecasting inflation for monetary policy means we also need to understand the feedback loops by which domestic monetary policy decisions affect the global economy and global financial conditions. In short, greater interconnectedness raises important implications for the monetary policy transmission mechanism. The reaction function of the central bank and for the economic and monetary analysis in the context of our two pillar framework the international transmission of both our conventional and unconventional monetary policy means we as policy makers need to understand these mechanisms and how they shake the design and impact of our decisions and actions. The second issue I want to touch on is digitalization. In the modern era it's hard to talk about the future of monetary policy without acknowledging the role of technology. Although perhaps self-evident it's worth saying that digitalization is implications for labor markets for productivity, for payments, consumption, price measurement and in fact for our entire understanding of economic activity. It's very relevant to the transmission of monetary policy as all of us will have noticed since the pandemic started technology has mitigated the impact of the crisis by allowing us to more easily work from home, attend seminars of people across the world from our dining room table and several transactions without the exchange of visible currency among other things. It seems likely that at least some of the changes in behavior brought on by the pandemic without the virus will have implications for the conduct of monetary policy. Even prior to COVID-19 we've seen a significant switch towards non-cash payments between 2014 and 2018 the number of card payments in Ireland almost doubled from 0.6 billion to 1.1 billion transactions and the crisis has accelerated this trend card transactions used for groceries and perishables increased by 34% on an annual basis between May 2019 and May 2020 and new methods of contacts payments are growing in Ireland and around the world and central banks have to respond to these trends and be ready for change. A switch to digital payments has a number of implications for monetary policy in particular where they can lead to a dilution of a central bank's control of the money supply and its ability to deliver on its price stability mandate. A recent BIS report indicated that over 80% of surveyed banks involved in research on some form of central bank digital currency including the ECB and the euro system such a currency raises a number of significant issues that go beyond digital payments and could change our understanding of monetary policy bringing new opportunities to the already rich toolkit that central banks have. I should add before you worry about all that cash you have under your mattress that there is no immediate pending switch such a digital currency as President Lagarde indicated recently our working assumption is that a digital euro if it happens will be a complement and not a substitute for cash. Digitalization has profound implications for labour markets, technological advancements and increased automation can alter and disrupt labour markets. Different effects across sectors sometimes changes lead to labour substitution and sometimes they can complement labour. The effects of digitalization productivity are similarly opaque and one of the conundrums facing policymakers is why productivity has remained so lacklustre in the face of rapid digitalization. New technologies can pose adoption challenges for traditional businesses that can be disrupted at least in the short run. But it remains to be seen whether they will boost productivity in the future. We need to monitor these developments carefully in particular from a monetary policy perspective not least to understand their impact on the Philips Curve. Overall the pandemic has clearly increased the relevance of digitalization in our lives and some of the changes in labour markets and payments that occurred that have occurred as a result of the pandemic may outlive the virus and we'll need to take account of them to ensure our monetary policy strategy is fit for purpose. Now the primary objective of Euro area monetary policymakers is to maintain price stability which is defined as annual growth in the harmonized index of consumer prices of below but close to 2% over the medium term. And when there is a shock that moves inflation away from its targets establish the precise nature of the shock so that we can address it appropriately and for instance a negative supply shock which decreases production capacity will push prices up while a negative demand shock will push prices down but if the shock is short lived the impact on price stability may be limited and monetary and fiscal policies are effective in addressing demand shocks but much less so in the case of a supply shock. So overall it's important to understand whether we're faced with demand or supply shock and whether it's persistent or transitory. The Covid the pandemic triggered an exceptionally adverse shock but it's difficult to categorize it as strictly of one type or another. Some argue that it's a combination of different sectoral demand and supply shocks. They have created different conditions in different sectors. Some sectors such as manufacturing seem to have mostly suffered from supply constraints whereas transport services were largely affected by reduced demand and both large demand and supply shocks have affected sectors like tourism and restaurants. So demand supply imbalances are sector specific and they've resulted in differences in inflation rates for different goods. Data shows that the immediate effect of a pandemic on inflation has been negative reflecting that demand side factors have played a more important role on aggregate. As last week's Governing Council statement noted headline inflation is likely to remain negative over the coming months before turning positive again in early months. Over the medium to long-term it's not straightforward to disentangle and predict how demand and supply shocks will interact. Even when a supply shock affects some workers more than others, complementarities across sectors can lead to a contraction in demand that is even larger than the original shock. As both demand and supply side factors will continue to impact on inflation I believe that demand factors can lead to a fall in prices. Financial markets data corroborate this view. Fears of inflation, weak labour markets heightened uncertainty and higher precautionary savings will lead to lower demand for goods and services which implies that the real natural rate of interest is likely to remain at low levels and bearing in mind the effect on natural rates and the possibility of long-lasting scarring effects from a recession via labour market credit and expectations channels. The policies introduced by both fiscal and monetary authorities in response to the shock were important and necessary. A separate but equally important issue is how the pandemic impacts on our ability to measure inflation. While data point to disinflationary effects we've got to consider several caveats when interpreting recent inflation figures. As the virus spread across the world a number of studies used high frequency financial transaction data to show how consumers changed their spending patterns. Many goods and services were simply not available for purchase due to the containment measures. Meanwhile consumers stocked up on food items, on hand gels and detergents and as a result the share of these items in their total expenditure increased in general. Consumers were spending relatively more on essential goods and spending less on goods and services from sectors that were most affected by the containment measures. So when calculating the overall inflation rate higher weights are given to those items in the consumer basket that make up a larger share of total consumer expenditure. It's not an issue I mean one of the, if consumption patterns changed significantly within a calendar year as has happened over the last nine months they tend not to be captured by our inflation rate as the weights aren't updated within the calendar year. It's not unique to a pandemic consumption patterns tend to change during economic downturns as consumers switch from more expensive to less expensive products but all this means that the pandemic induced a much stronger shift in consumption patterns than a typical recession and therefore our fixed weight consumer price indices have most likely underestimated inflation that's been actually experienced by consumers in the area during the period of strict lockdown the march to May period inflation rates increase the most for food and non-alcoholic beverages but it declined sharply for transport driven by lower old prices. So the actual inflation rate that households experience is probably higher than that suggested by our index and that's one of the factors we're going to have to think about as we look to review our measurement of inflation as part of the strategy review we looked at it in 2003 decided that price index we were using was fit for purpose but we're going to look at it again. So let me just conclude now to allow time for questions I hope there are lots of them the pandemic is having a substantial impact on all of our lives which means that it's also having a substantial impact on monetary policy the post-COVID-19 world could be different in a number of aspects economies likely facing new structural changes while changes already underway may accelerate or averse all of which will have implications for future monetary policy. In order to fulfill our price stability mandate we must not only closely monitor but also understand the factors driving inflation dynamics although of course on structural changes in digitalization and globalization are outside of our control we need to understand the effect on monetary policy of the euro areas incomplete banking union and the fragmented nature of its financial capital and credit markets and of its fiscal policy on the latter as my colleague Isabel Schnabel said last week secular trends have changed the interaction between fiscal and monetary policy understanding the implications of this interaction for the conduct of monetary policy is one of the many important aspects of the strategy review that I'm looking forward to but it's also a topic for another day so I'll end it there Dan and I'm very happy to take questions thank you presentation lots to digest there could I start with maybe an upbeat question about this morning across Europe on how much factories are producing should those islands a complete outlier our manufacturing our industrial output has grown in double digits over the past year most other countries are seeing big falls any thoughts on why that might be happening and does it mean as somebody earlier in the summer suggested that shortening of supply chains and greater security of supply maybe benefiting Ireland in terms of production moving back from Asia to a place that might be considered more secure in the transatlantic economy I'm not sure how much production is really moving back from Asia although clearly there are changes to it but I think what you are seeing at the moment and to be honest a lot of the economic data we're seeing now we've got to keep remembering as if we never forget is that we're living in pretty exceptional times and we've just got to be careful about swallows and not making this summer etc but I think what you're seeing in there are two particular issues I think with the Irish outlier point one as we know the GDP data it's disproportionately influenced by intellectual property and so we've got this GNI star measure that tries to correct for that so some of the comparisons that you see aren't like for like but one of the things that we've noticed probably from before the pandemic is the resilience of pharmaceutical exports and the resilience of chemical chemicals in particular as well and I think what we're seeing is that just the partly driven by the pandemic but just the nature of what it is that's being manufactured what it is that's being exported has been one is a very important part of the Irish economy and one of our exports and that has held up pretty spectacularly over the last nine months good the questions are flooding in now could I just ask people when they type in their questions if you could put in your affiliation which Alan Dukes the former finance minister did his question is this the government will tomorrow announce a six to nine month plan for living with Covid this may some firms to seek extended breaks from their banks can we be sure that such payment breaks will not be treated as non-performing loans for regulatory and micro-prudential purposes there's two there's two I mean I'll answer the question but I do want to come back to the point about nine months plan one of the things one of the features of obviously the last I think I said nine months a few minutes ago to be honest it feels like two years but anyway since March has been the the availability of payment breaks for households and businesses we're going to be publishing data tomorrow that indicates firstly the extent of the use of these payment breaks but secondly that actually a significant number of people have now reverted back to their have left a payment break and have either reverted back to where they were or have entered into a a new arrangement so that will be out tomorrow I think the world we're moving into now is one where we're probably going I mean this has always been possible it's always been possible for and fundamentally it is up to the lender to decide with the borrower to decide the extent to which a payment break should or shouldn't be available I think what we're moving into now is probably a decision point where the payment breaks to the extent that businesses or households feel they need to continue we're probably moving more into a world where we actually the lender will need to think about restructuring the whole the whole of the of the debt or the loan now we're going to be the EBA the European Banking Authority which we are part of sets the rules as to what is or what isn't a non-forming loan to make sure that's consistent across the euro area that's going to be something that we're going to have to think about quite carefully but as long as this crisis continues the less possible in my view that we can simply postpone postpone some of the decisions as to whether loans are actually borrowings or in fact businesses if I can go to the point are viable or not because that will determine very much and it's up to the lenders will be best placed to make those judgments the extent to which some of those loans can continue businesses can continue and therefore restructuring is worth doing and I think that's really what the main focus needs to be and in particular if I can just say in Ireland one of the things that we all need and this isn't just the central bank not the regulator and the lenders but I think the whole community needs to be looking to avoid what I think is an ongoing problem for us which is the legacy of some of the legacy of the financial crisis some of the debts that continue and we need to avoid I mean there's bound to be just because of the recession and the impact of the shock there's bound to be more as we'll see from the pain and breaks of people in a distressed debt situation but we need to avoid that almost becoming a structural problem which I think we have with some of the legacy debt from the financial crisis which is why we are encouraging in line with what the Banking and Payments Federation of Ireland in their recent advertising have been encouraging is that borrowers engage with their lenders if they feel they're going to have a longer term problem but if I can come back Dan on the point about the six to nine month plan from my perspective one of the things I'm coming to terms with I mentioned at the beginning of my speech that in April we all hoped this was going to be short lived we're now having to learn to live with this my view and I put my hand up and say I'm not a epidemiologist, I'm not a I've got no expertise in health issues but from what I observe and read and what I've absorbed looks to me that the impact of the pandemic is going to be around for a lot of 2021 for a lot of next year and what I think businesses and households need the most right now is a sense of what is the plan for this longer term period so they can start to make arrangements try to put some order either in their sort of home lives or in the business decisions they have to make so if you think about the first few months of the crisis we we had lots of decisions being made on the basis of new information we were learning as we were going I think we're now reaching a point where we know well actually it seems to me that this virus is not going to be eliminated in the next few months and we need to learn to live with it as best we can and living with it means that economic activity needs to continue as best it can the more that households and businesses can be given time to plan so the more that there is a long term plan they can sort of frame their own decisions around but better I think it will be for the community at large and for the economy so I do think this is a pretty important for me I think it's a pretty important issue and has big implications for how the economy will function over the coming months could I just too follow would that suggest that you think a full scale lockdown would be inappropriate under any circumstances do you have a view on that and you also mentioned legacy bad loans from the last recession they had become a structural problem what did you mean by structural problem I I think another lockdown across the whole country would have very serious implications for the economy and for the community at large do I think it would be inappropriate under any circumstances of course not I'm not a health person so I leave those judgments to them but as I said I do think that if we were certain we could eliminate this virus and we were certain on the time scale then perhaps by full lockdown then perhaps that's what we should be doing but my observation is that that's highly unlikely so I think it's better if we're going to have to live with it but the economy does continue to work and that we do give ourselves as much of a framework on which to make decisions hence the more I don't know what the government is going to come out with but the longer the plan longer the time scale of the plan I think it's better for everybody a very important moment in this so what I'm saying is we want more certainty that we've had and I think a very important moment for that sense of certainty albeit in extraordinary circumstances is the return to school I think that has helped and fingers crossed that it actually continues to proceed as smoothly as possible I think that has helped everybody households, businesses to start the plan for the future by structural problems well the reality is that there are debts outstanding from the financial crisis there are in some cases people borrowers who have not engaged with their lender on resolving those arrears the legacy is not helping Ireland it's not helping the community individuals it's not helping the lenders it's not helping future borrowers because of the shadow it casts on on the economy as a whole I mean one of the reasons as we've said in the past one of the reasons are interest rates not the only reason but one of the reasons are mortgage interest rates are slightly higher in the euro area is because of the legacy of the last crisis so the more we can sort of the more we can resolve those issues and certainly making sure that we don't exacerbate those issues the better I think it will be for the community as a whole thank you I have two questions here on the same theme Simon Bowery from Mulskebank and Dernter Leary both of them point out that the ECB's own inflation forecast going out the next couple of years point to an undershoot of the inflation target Simon asks is why are ECB monetary policy settings not more accommodative at present and Dermot picks up on that point and says are we at risk of falling into a Japan-style long period of low or falling prices what can ECB learn from the experience of Japan I think we are so my short answer to that is no I think we are still in a world where we are trying to understand exactly the impact of the pandemic and what it will mean for the transmission of monetary policy and ultimately inflation I mean the reality is that as we said last week we've there's been quite a robust at one level quite a robust recovery in the euro area economy but it's it's in particular sectors it's not across the whole economy and of course it's nowhere near returning us to where we were pre-pandemic so I think our policy settings are right but we're keeping as close and I as we can try to understand as much as we can in the exceptionally unusual circumstances that we live in and we'll make whatever decisions that we need to make to make sure that we deliver on our mandate one of the things that hasn't come up yet is the march for the pandemic purchase program the use of the central bank balance sheet in a really radical way there's been huge expansion of central bank balance sheets in the developed world including the eurozone much of that has gone to purchasing sovereign bonds how long do you foresee the pandemic purchase program continuing and how important has it been has it influenced consumer prices how important has it been in influencing asset prices well it's certainly it's certainly been a very important part of the response of the pandemic shock and which is why we have from when we made the decision to launch the PEP program on the 18th of March we subsequently increased as well it was having an effect and we decided we needed to have a bigger effect so it's working and we've at this stage the program will run until the middle of next year when we come to look at the data again later on this year we'll make as we always do we look and decide what are the numbers telling us what actions do we need to take and do they need to be different at all I mean overall we're aiming to deliver on our price stability mandate and that's our focus when we looked at this last week we decided we didn't need to make any changes but we didn't make any changes because things are working as I said it's been an important step and they are working in the direction that we want them to work another Japan related question here from Noelle Burke wonders whether the ECB should consider the purchase of exchange created funds such as the Bank of Japan has done quite a detailed one do you have any thoughts on that well I don't think we need I mean we're we've got a pretty we've got a pretty extensive toolkit and we're also we're also prepared to innovate at the moment at the moment we're happy with our toolkit and we're happy with the actions that we've taken so I don't think if we feel we need to do something different to deliver on our mandate we'll do something different but at the moment we are already on and the review when is the review supposed to conclude the second half of next year okay did you see any possibility of that being pushed out given the extent of the uncertainty well if you'd said in February when was the review going to conclude I would have said in the first half of 2021 and then something happened and so who knows but I'm quite keen to be honest with you that I don't want to delay any further for one particular reason well two reasons one dragging these things out ultimately it doesn't matter what any good because we're just going to do the work understand the issues and just make a decision on what it means for policy but secondly my own view and this is not the view of I don't know what my colleagues on the council governing council think but my own view is that we need to move to a world where we're actually doing a strategy review much more often I personally I think every five years we should do a strategy review it should be a bit more of a business as usual sort of process as opposed to doing one every 17 years so if you have an every five year approach then actually delaying it much more it doesn't make a lot of sense the last review was almost two decades ago well exactly I mean I suspect that if it wasn't the financial crisis they may have looked at the review you know it looks at the strategy in the meantime but I don't know but yeah the last review was in 2003 bear in mind the Euro started in 1999 it was reviewed you know the strategy was reviewed a few years after that and it's been a long time since we've looked at it FinTech question from Joseph O'Hanlon from Comreg let me read it with increasing digitalization shouldn't the CBI expand its innovation hub and develop a full scale regulatory sandbox like the UK financial conduct authority has UK sandbox grants waivers and no action letters that your central banks innovation hub does not currently do again quite a technical one do you have any thoughts on that no I I'm not sure whether I'd copy what the UK are doing but I do think that I do want our innovation hub to play as big a role as it can with the resources that we can devote to it but play as big a role as it can to the development of FinTech if you want to use that word not just in Ireland but as part of the Euro system so the Euro system has is participating in the BIS has set up an innovation hub which has a number of centers around the world the Euro system itself has set up a center as part one of the BIS' centers is a Euro system center based in I think Paris and Frankfurt France and Germany anyway Paris and Frankfurt we in Ireland are part of a small group of ECB countries who are inputting into that innovation hub Euro system level so I you know the general sort of answer to the question is that this is the future completely agree this is the future and we want to be we're going to be part of the future but whether we're going to do what the UK is doing I'm not sure okay great another one from industry Pat Lardner from the Irish Funds grew a representative of the body your speech made reference to the transmission mechanism monetary policy transmission mechanism both conventional and unconventional how is the data set which the ECB and other policy makers use expanded to understand the impacts of this broader conventional and unconventional policy measures to some extent that is also a technical question but the data set has been expanding and one of the one of the things that the ECB has been looking at is making sure it has the broadest possible information set to understand the impacts of both monetary policy and unconventional monetary policy I mean I talked about our measurement of inflation I mean the other thing is the flow the flows of funds across the system not least in funds and in non-banks which as some of you will know I'm very interested in understanding better but I don't sure I can add much more to Pat's question at a technical level but the monetary policy at the end of the day is all about interpreting data and communicating our analysis of it well In fairness there does seem to be a greater use of the high frequency data card payment data on a daily basis compared to the same data previous year search engine mobility data all of that is sort of helping us get a feel for what's happening with certainly the wider economy can I give you a question on climate from one of my colleagues here how is the bank managing its role to help build a climate resilient financial system when the response of the pandemic has taken up so much time and does the bank have any intentions to run a stress test on the financial stability in plaques of climate change we haven't made decisions on that yet but at the end of last year we announced that we were creating we announced internally that we were going to create a new division that was going to focus on climate change so we were adding I mean that's not to say we weren't studying climate change before that but we decided that we were going to give it extra focus by creating a structure around that and then the pandemic hit and we had to reprioritize so a lot of the work that we would have wanted to do during the course of 2020 has had to be delayed but but our objective hasn't changed and it is one of those things which I as I've signaled before to people a lot of the issues that we face before the pandemic have not gone away we've had to obviously focus on the pandemic and the response to it and to manage the pressures of the immediate but there are some very big issues that remain climate change is one of them and the central bank with its partners in Europe are absolutely going to be focused on understanding the financial stability issues and others to be honest because you could see how the move to a lower carbon world is also going to impact on our understanding of our we'll have monetary policy implications because of its potential impact on energy costs thanks Gabriel so we have we'll finish with a question on how you and your colleagues view the appropriateness of the fiscal response but we've got a couple of questions predictably enough on Brexit Peter McLoone one of our board members says do you have any thoughts on a hard Brexit coming on top of Covid challenge and my colleague Andrew Gilmour asks how does the how are you factoring in a hard or no deal Brexit in your planning on issues like financial stability for example do you have thoughts on impacts of a hard or no deal Brexit a big issue and I'll try and I'll avoid the drama of last week which is obviously part of the whole story but back in February I spoke at the European financial forum and I remember saying that you know the UK now left the EU and that whatever world was going to arrive was going to be not as good as the world when the UK was in the EU and we should start planning for the fact that there would be differences and they would not be and they would have an impact on the Irish economy and we should start you know I mean one of the things I was worried about to be honest of you at the time and to a certain extent I've been worried about for a little while is that too many people were hoping that the transition period would carry on forever that's it was and the advice has always been start planning for divergence our quarterly bulletin in July has an assumption in it that some sort of free trade agreement will be negotiated between the UK and the EU but a trade agreement around no tariffs essentially no tariffs and no quotas on goods we've said before that if that didn't happen there would be a hit of between 1 and 2% on Irish GDP and I I think we should it will be wise to plan on the basis that there won't be a deal and that there will be a hit of between 1 and 2% GDP we need to look again at our numbers because that's not up to date but that's the last time we looked at it one of the extraordinary things about the from my perspective about the whole UK EU economic debate is how much how little focus has been given to services it's a very very significant part of the UK economy and it's an important part of Ireland's economy but a lot of the popular commentary has been about trading in goods and I suppose it's easier to and more tangible from our perspective where we were before we were back in October last year and I was asked this is when we had many deadlines that went through 2019 on hard Brexit our position similar to what was then which is we think the financial system as a whole in Ireland is ready for Brexit we can't say that every single firm itself is ready but we feel the big ones are ready we feel the system as a whole is ready now what exactly is going to happen at the end of the day the last week as just highlighted that a lot of us don't know what is going on and there's just a few people who have a sense of what it is that will ultimately be agreed so again there's the short term implications of all this and there's the medium to longer term implications of all this for me what's clear as far as the medium to long term is concerned is that the UK has left the EU it will in economic terms leave the EU from the 1st of January 2021 we need to start working on the basis that it won't be part of the old system that we knew and we need to start working to develop with the rest of our EU partners a new world and hoping that we can enter into arrangements with the UK to actually support and enable both the companies to do well Governor we've run out of time so that question on the appropriateness of the fiscal stance will have to wait until the next time and I hope this was your first time speaking to us at the IIEA and many thanks for doing so and we do look forward to having you back in person hopefully when things are safe and we're able to do that I welcome you to North Great Georgia Street so we look forward to and hope that that's possible in the near future so on behalf of all my colleagues at the Institute and all our members thank you for your time today and for sharing your thoughts thank you Dan