Speech by Lucas Papademos, Vice-President of the ECB

May 4, 2oo9

Let me start by thanking the organisers for inviting me to this policy debate on how to overcome the current economic and financial crisis and bring back prosperity for everyone. This subject remains topical and challenging. Lately, among the generally gloomy reporting on the state of the economy, we have observed some positive signs emanating from market developments and confidence indicators suggesting that the economy is stabilising. Indeed, one indicator that has recently surged is the one measuring the use of pertinent metaphorical expressions: we hear of “green shoots”; “glimmers in the dark”; and, the more traditional, “light at the end of the tunnel”. Some indices suggest that the pace of deterioration in the global and European economies is slowing, and equity markets seem to reflect expectations of improving prospects. But it will take some time before our economies fully recover and grow at a robust and sustained rate.

The theme of this debate rightly emphasises two important issues that are relevant for public policy: first, the dual character of the current crisis, which is both financial and economic and, second, the need to also focus on the longer term. The actions of policy makers and market participants should not only aim at overcoming the current difficulties, but should also consider the strategy and measures that will ensure sustained prosperity and that crises such as the current one will not occur again. Read the rest of the ECB speech…