The better understanding of the relationship between monetary policy and banking is not only important from a monetary policy perspective but also from a financial stability perspective. Therefore, I expect that this workshop improves the understanding of these two perspectives.
The agenda names a host of critical issues in this respect:
- The effects of the prolonged period of very low interest rates and unconventional monetary policy including the continued central bank balance-sheet expansion
- on banks' incentives to generate loans,
- profitability and
- their cost of equity.
As a consequence, the workshop also contributes to the international and inter-institutional debate about the interaction between monetary policy and financial stability. Let me start with a question: Are financial stability and monetary policy two horses that try to pull the carriage "economy" in opposite directions?
To answer that question I will critically assess some statements that are often mentioned in public discussions, but some of them do not seem to be well-grounded.