00:00Joachim, there has been this discussion before we get into just how you balance the risks of inflation and growth.
00:06I do want to get a sense of what Katie was just talking about, financial stability and risks there.
00:12How much have credit cracks or concerns about elevated valuations dominated the conversations you've had here?
00:18Thank you very much for this question. I think it is an issue here. It's part of our discussion.
00:24As always, financial stability is part of our mandate because it has so many spillovers.
00:30to price stability. And we all know there are so many uncertainties.
00:34Is it the tariff discussion? Is it geopolitical risk? Or is it the situation with China?
00:42Many uncertainties. So we have to be concerned to a certain extent.
00:46It doesn't look too bad for the moment, but I guess we have to be richer than, as always.
00:52There is this discussion among a number of ECB members that you're in a good place,
00:57that 2% after 8 rate cuts, has been a proper place to be, at the same time that there is this potential downside risk to growth.
01:06Does it concern you that there isn't a rate cut on the table, considering that inflation seems to be in a good place and there still are downside growth risks?
01:14The most important element here is what do we know about price stability and how are the prices going for the next couple of months.
01:28As far as I can see it, I'm pretty confident that we are close to our target, and this is good news.
01:36So I'm not so concerned that maybe we might undershoot inflation for a long time.
01:44So personally, I think this meeting-to-meeting approach is the best way to really do the right thing.
01:53So I'm rather comfortable where we are.
01:54And when there is maybe new data coming that gives me maybe a different opinion, I'm open to change something.
02:04But for the moment, I would say it's good where we are.
02:07How much are you focused on China and the exports from China coming into the region,
02:11and what that could do in terms of a disinflationary force right now?
02:15Well, this is a difficult situation.
02:17Maybe it's too early to say something about the medium-term and the long-term impact.
02:24Is that a situation that will last for long?
02:29But the whole terrorist situation is definitely not a situation where we will see winners.
02:36It's a lose-lose situation.
02:38But we on the European side, we have to look at it.
02:40This is for sure.
02:42We have to talk to China.
02:43I think China has to understand that they cannot flood Europe with cheap goods.
02:50I think this is not something that I would accept as a proper strategy.
02:55So it's not necessarily a disinflation that you would welcome?
02:58Well, at the moment, I do not see this development that we see really prices might go down in a way
03:05that I would take that from a central bank perspective as a kind of a threat.
03:10So I'm vigilant.
03:13I'm definitely not in the position to be complacent.
03:17We have to look at it.
03:18What does that mean for the prices in Europe?
03:21But I guess we have also to talk to China.
03:24There's also a big discussion here about the technological disruption and artificial intelligence
03:29and what this might do to reconstructing the economy in different ways.
03:33How much are you seeing it as AI being a disinflationary versus an inflationary force?
03:38Which is it?
03:39This AI topic is a hot topic, I think.
03:44And I believe it will be one of the hot topics for the next years.
03:49It is a disruptive technology.
03:51This is for sure.
03:53We do not know what does that mean in terms of productivity gains.
03:57What does that mean for employment?
04:00What does that mean for inflation?
04:02So it's maybe, again, maybe we do not have enough information.
04:06It is too early.
04:07We have to look at it.
04:09But it will come with challenges.
04:12It seems like it's trade, AI, and then dollar debasement.
04:15Those to me are the three big issues.
04:17And dollar debasement is also part and parcel with the crypto discussion and how much stable
04:21coins are going to disrupt the financial system.
04:23I'm wondering, from your perspective, do you take that seriously in terms of how much people
04:28are moving away from the dollar as a reserve currency?
04:30Or do you think that's just a popular topic?
04:32I guess we do have to take that seriously.
04:35I think this is an important development.
04:41I think stable coins on its own, at the moment, it's not a relevant asset class.
04:46But we all know that over the next years, it will become much more relevant.
04:53So from a regulatory point of view, we have to understand better where are the dangers behind
04:59stable coins.
05:00Is it maybe something that means dollarization?
05:04So from the European perspective, this is something we have to look at it.
05:09But on the other hand, we should be also open to such innovations.
05:13But as always, there are pros and cons.
05:16And the role of the central banks is to find a good balance between the positive aspects
05:22and the negative aspects.
05:24So as the head of Germany's central bank, how much do you almost wish that there was a dual
05:28mandate at a time when there is an auto sector that's flat on its back, that's really struggling?
05:35The economy hasn't really been growing significantly, if at all.
05:38Is there a sense that maybe there needs to be more done to try to support growth from the monetary side as well as the fiscal side?
05:46So this is easy to answer.
05:47I am very happy with the single mandate.
05:51I'm not looking for more.
05:53I think this is enough.
05:55And we have really a lot to do.
05:57The last three years, coming from a period with very high inflation rates, now again down to 2 percent.
06:04This was a tough road.
06:05And single mandate, this is OK.
06:08President Nagel, thank you so much for your time.
06:10Really appreciate it.
06:11Thank you very much.
06:12That was the Bundesbank President Joachim Nagel.
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