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Kicking off the event, Bundesbank Executive Board member Burkhard Balz remarked that he would, of course, have much preferred to welcome Sylvie Goulard, Second Deputy Governor of Banque de France, in person, having known and respected her ever since their career paths crossed at the European Parliament. “But, sadly, coronavirus has put paid to that!”, he lamented. Ms Goulard therefore joined the event via live video link from Paris, while Mr Balz participated from Frankfurt. Around 250 students across Germany participated from home, while just under 100 students and lecturers attended the event in Hachenburg, spaced out across two lecture halls.

“Far-reaching changes”

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Sylvie Goulard, who has been the Second Deputy Governor of Banque de France since 2018, only touched on the COVID-19 pandemic in passing, instead focusing mainly on the challenges facing society and their impact on the role of the central bank. She emphasised that climate change poses a global threat and will have important repercussions on the world economy. Ms Goulard also pointed to advancing digitalisation and expressed concern that the European Union is not keeping up with the United States and China in this area. The same applies to demographic developments, she said, highlighting that “the EU’s share in the global population will fall by 2050.” And the proportion of the EU population made up by those aged 65 and over will rise significantly, she added, generating higher costs in areas such as healthcare.

“Coalition of the willing”

“All of these far-reaching changes also have implications for the world of central banking”, the Second Deputy Governor emphasised in her speech, which she held in German. As a case in point, she cited climate change, which leads to large fluctuations in energy prices and thus affects the rate of inflation. “Although central banks count on continuity and vitally depend on the trust placed in them, they have to respond to these societal changes,” she said, going on to mention the Network for Greening the Financial System (NGFS) as a positive example. This “coalition of the willing” was founded in December 2017 by eight members, including Banque de France and the Bundesbank. Today, the NGFS has 69 member institutions. “The NGFS tackles methodologically complex topics that do not have simple solutions”, highlighted Ms Goulard. But, she added, it is important for central banks to engage with this issue because, in many cases, financial markets have not yet sufficiently priced in the negative external effects of environmental pollution.

The Second Deputy Governor also praised the European Payments Initiative (EPI), a pan-European private sector initiative spanning five EU countries that supports the work of the Eurosystem. She was also pleased to see that the Eurosystem central banks themselves have been looking into the possibility of introducing a digital currency for some time now. “We need to be prepared, particularly when we consider that the central banks of China and Sweden are already striding ahead in this process”, she said. However, she expressed concern about the recent rise in debt in the wake of the COVID-19 crisis, which reduces governments’ room for manoeuvre.

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Many students contributed via chat messages to the subsequent group discussion, moderated by the Rector of the Bundesbank’s University of Applied Sciences, Erich Keller. One student was interested, amongst other things, in how the Second Deputy Governor views the ECB’s strategy review. “The world has changed a great deal since the last strategy was adopted in 2003, which is why this process is necessary”, Ms Goulard replied, adding that it is a good thing for any institution to take a fresh look at its own strategy. In response to the question of how cooperation in the Eurosystem needs to be reformed, she commented: “I am in favour of all reform steps that increase confidence in the currency and convergence in the euro area.” She emphasised that she is against reforms that merely sow conflict, and takes a pragmatic view of the issue.