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WorldEuropeOn its 25th anniversary, the European Central Bank pledges to reduce inflation

On its 25th anniversary, the European Central Bank pledges to reduce inflation

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The European Central Bank, created on June 1, 1998, months before the adoption of the single currency, aims to maintain price stability, which today translates into a medium-term inflation target of 2%.

“For the ECB, our immediate and immediate priority is to bring inflation back to our medium-term target of 2% in due time,” Lagarde said, in the presence of some 200 guests.

“We will,” she continued, but warned that “there will be other challenges ahead that the ECB will have to resolve, and we must continue to provide stability in a very unstable world.”

Two of Christine Lagarde’s ancestors, Jean-Claude Trichet and Mario Draghi, attended the ceremony and shared the cake with her.

Inflation in the euro area, which has reached a record level – it was still 7% in April – will eclipse the context of energy prices and imported raw materials which have increased since the recovery from the pandemic of Covid and the crisis in Ukraine.

“That doesn’t stop us from having good reason to celebrate at the European Central Bank,” Lagarde told Dutch broadcaster Boetenhof.

“25 years ago, our objective was to ensure price stability, better European sovereignty and to show more solidarity: we have kept our commitments on these three points”, she added.

However, alongside this generally good result, the institution experienced several crises. It had to deal with the shortcomings of the monetary union which led to existential crises such as the risks of the collapse of the euro in 2010 due to the public debt crisis in the European Union.

This was followed by a long period of slow inflation, followed by a rise in prices recorded for more than a year.

The institution made big mistakes: in 2011, Jean-Claude Trichet raised interest rates as the crisis loomed. His successor, Mario Draghi, corrected the situation immediately after taking office and went on to win the title of “Super Mario”, the savior of the eurozone.

But the Italian’s uniqueness in running the institution has led to disagreement in the Governing Council, which is made up of national central bank governors who have differing ideas on proper monetary policy.

And Christine Lagarde, thanks to her good management, has helped to close ranks.

“With each crisis, the ECB has succeeded in innovating and adapting,” said Frédéric Ducrosie, chief economist at Pictet Wealth Management. “It’s something to remember before highlighting mistakes or internal tensions.”

Today, the European Central Bank employs 4,200 people who, since 2014, have supervised the major banks in the euro zone. Its mission is still evolving and it wants to change its monetary policies to meet the need to fight against climate change.

As for the euro, which is used by nearly 350 million Europeans in 20 countries, “it will remain present for several more years”, according to Ms Lagarde.

The European Bank launched the Digital Euro Workshop to create a new mode of payment in response to the proliferation of cryptocurrencies.

Read the Latest World News Today on The Eastern Herald.

Copyright © 2023 The Eastern Herald.

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Arab Desk
Arab Desk
The Eastern Herald’s Arab Desk validates the stories published under this byline. That includes editorials, news stories, letters to the editor, and multimedia features on easternherald.com.

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