Klaas Knot: Bold, but realistic - monetary policy and financial stability

Keynote speech by Mr Klaas Knot, President of the Netherlands Bank, at the 5th Capital Markets Seminar, jointly organised by the European Stability Mechanism, the European Investment Bank and the European Commission, Luxembourg, 6 June 2023.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Good morning everyone.

Today is June 6th. A date of tremendous historical importance. The day that, exactly 79 years ago, marked the beginning of the end of the Second World War. A day that you could see as the beginning of what we now know as the European Union.

One of the founders of our Union was Robert Schuman. He was born just a stone's throw from where we are today – right here, in Luxembourg City.

What a bold man. A bold, but realistic man.

"Europe," he said, "will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity."

And indeed, looking back, there was no single plan. But what we do see, when we look back, are concrete achievements. Like our hosts today: the European Commission, the European Investment Bank, and the European Stability Mechanism. And what we also see, when we look back, is de facto solidarity. Between people, between countries, and in concrete achievements like Next Generation EU.

The ESM is one of the youngest achievements in this very incomplete list.

A mere 14 years ago, at the height of the euro crisis, we did not have the ESM. We did not have a European mechanism in place to deal with economic and financial stability issues. But many of you here today realised that we needed one.

And it is testament to you, and all those involved, that the ESM has become, in a very short time, a cornerstone institution of the European Monetary Union. During the sovereign debt crisis, it was directly involved in successfully restoring market access to multiple euro area member states. One quick look at today's relative borrowing costs tells a very convincing story here.