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Former ECB Chief Economist Peter Praet on What's Next For Central Banks

Dec 3, 2020
Peter Praet, the former Chief Economist at the European Central Bank, shares invaluable insights from his nearly ten years under Mario Draghi. He discusses the ongoing challenges central banks face in achieving inflation targets amidst political hurdles and economic shocks. Praet explores the critical balance between monetary and fiscal policies in the recovery phase following the pandemic. He also addresses the impact of digitalization and globalization on monetary strategies, emphasizing the need for innovative approaches in today's complex economic climate.
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INSIGHT

Europe's Crisis Response

  • Europe reacts strongly in crises, but often relies on reactive rather than preventative measures.
  • While the common debt issuance and fiscal transfers are positive, their one-off nature creates ambiguity for the future.
INSIGHT

Central Bank Challenges

  • Central banks face common challenges like reaching the lower bound on interest rates.
  • Successive shocks and changing global dynamics complicate monetary policy effectiveness.
ANECDOTE

Draghi's Leadership at the ECB

  • Despite internal disagreements, the ECB reached policy decisions, often with Draghi taking risks like "whatever it takes."
  • Political acceptance of ECB leadership was crucial, especially when institutional settings were weak.
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