Twitter Q&A: Your Questions Answered

Frank Elderson, Member of the Executive Board of the ECB, conducted an interview on Twitter on 16 March 2021. During the interview, he addressed various topics and answered questions from the public. One question asked about the potential negative consequences of ECB policies, to which Elderson acknowledged the possible side effects but highlighted that they are actively mitigating them. Another question inquired about the evaluation of climate risk in the ECB’s investment portfolio, and Elderson explained that the Eurosystem is working on measuring greenhouse gas emissions and other sustainable investment-related metrics. In terms of inflation, Elderson stated that while inflation has increased recently, it is mainly due to transitory factors, and underlying inflation remains subdued due to weak demand. Elderson also addressed concerns about the zombification of the EU economy and emphasized that the pandemic’s impact is temporary, reducing the risk of zombification. He expressed pride in his family and commitment to helping Europeans during the pandemic. Elderson stated that interest rates are expected to stay at their present level or lower until inflation reaches the ECB’s objective. Regarding crypto-assets, Elderson highlighted their volatility and lack of intrinsic value, contrasting them with the potential benefits of a digital euro backed by the ECB. He emphasized the importance of disclosure and transparency on environmental risks and the ECB’s commitment to incorporating climate change in their tasks. Elderson explained that pandemic-related supply constraints may increase inflation this year, but underlying price pressures are expected to remain muted due to weak demand and low wage pressures. He addressed concerns about inequality, stating that asset purchases have helped maintain jobs, and the positive effects have exceeded the negative ones. Elderson clarified the terms “upstream” and “downstream” in relation to monetary policy transmission. He also made a historical reference to Tulip Mania to caution against prices not reflecting intrinsic value. Elderson highlighted the ECB’s commitment to climate action and the ongoing strategic review, including discussions on market neutrality. He mentioned the establishment of the ECB climate change centre and its role in shaping the ECB’s climate agenda. Elderson reiterated that the ECB must contribute to the success of climate change-related policies within their mandate, but it is up to governments to implement such policies. In terms of diversity, Elderson emphasized the value of diversity and mentioned that governments appoint the Executive Board, while the ECB encourages diversity in the banking sector. Finally, Elderson explained that the ECB uses its resources to preserve favorable financing conditions and expects to increase the pace of purchases under the PEPP program.

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