Thread by @DanielaGabor

fascinating speech, recognising between the lines the growing impotence of inflation targeting regimes.

if monetary tools weaker, you need fiscal policy.

https://twitter.com/ecb/status/1365217986475352073

Schnable makes strong case for monetary-fiscal coordination.

public sector 'insensitive to low policy rates', giving Euroarea a fiscally restrained stance that further weakened monetary policy

why? fear of market tensions and public debt sustainability.

she wont say coordination, but ' policy response to the pandemic is a remarkable showcase for the power of monetary and fiscal policy interaction to boost confidence'

jaja, brilliant Eurozone language games time: unconventional fiscal policy!!!!

we heterodox economists call it Keynesian fiscal policy, but ECB Board Members have a contractual clause forbidding them to pronounce that word

clever to have the German Board Member put pressure on European Commission/Member States to revise fiscal rules because they force austerity pro-cyclically

spectacular speech @Isabel_Schnabel - makes case for fiscal/mon coordination within monetary dominance framework

'... institutional framework that creates the tools and the space for fiscal policy to support the efforts of the central bank when inflation is below its aim'

we still in world of shadow monetary financing, but it's become more nuanced.

central bankers now recognise the loop: fiscal activism necessary in crisis to support monetary, but wont occur unless central banks support sovereign borrowing costs

https://twitter.com/DanielaGabor/status/1355161368064905219?s=20

sorry @fwred @LouisHarreau this beats Coeure top 3.