Robert Holzmann: To each crisis its analogy, to each analogy its critical reflection

Opening remarks by Dr Robert Holzmann, Governor of the Oesterreichische Nationalbank, the Austrian central bank, at the Konrad-Adenauer-Haus, Berlin, 11 September 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and gentlemen,

Throughout history, crises have been archetypal examples of moments when the power of analogy overrides, at least temporarily, the inductive and deductive components of economic policy decisions. The COVID-19 crisis, which has been severely affecting the global economy since spring 2020, is no exception to this rule. The devastating human consequences of the Spanish flu of 1918 led us to conclude that there need not be a trade-off between keeping mortality rates low and economic activity up. The Great Depression of the 1930s taught us what a difference quick and discretionary fiscal stimulus can make in the recovery phase. Finally, the Great Recession following the financial market turmoil of 2008 showed that a monetary union like the euro area needs strong monetary policy signals to ensure financial stability in the short term and prevent financial market fragmentation and an impairment of monetary policy transmission in the medium term.