Joachim Nagel: Maintaining price stability – the role of the Eurosystem and other economic agents

Speech by Dr Joachim Nagel, President of the Deutsche Bundesbank, at the European Economic and Financial Centre, London, 8 November 2023.

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

Check against delivery. 

1 Introduction

Ambassador Berger, Thank you very much for your kind introduction and for hosting this event here at the German Embassy. A particular welcome also to the further Ambassadors present today. Professor Scobie, Thank you very much for inviting me. I look forward to hearing your comments later. 

Ladies and gentlemen, It is a great honour for me to speak to you here today. The European Economic and Financial Centre's Distinguished Speakers Seminar provides an enriching forum for discussing matters of monetary policy. 

Today, I would like to address the following question: Who is responsible for maintaining price stability in the euro area? In my view, the answer to this question is quite simple and clear: The Eurosystem! That is, the European Central Bank and the 20 national central banks in the euro area. 

Does that mean that the actions of other economic agents are irrelevant? Absolutely not. Other economic agents can make the Eurosystem's life easier, but also more difficult. Ultimately, however, responsibility for price stability lies in the hands of the Eurosystem. 

At this point, you might be wondering: If the answer to my question is that simple, why don't we just proceed to lunch? Quite obviously, the devil is in the details and the full answer more complicated and nuanced. Allow me to explain my reasoning in more detail, starting from the macroeconomic environment.