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Central Bank hosts annual conference

Latvia's central bank (Latvijas Banka) is Friday holding its annual conference under the title "Have we learned anything from the crisis?"

The conference, which features a range of high-level speakers can be watched live at the bank's website.

In a general introduction central bank governor Ilmars Rimsevics lauded Latvia's "expansionary consolidation" policy, saying the country had been right to choose austerity over devaluation. 

"Latvia has enjoyed the fastest growth rate in the EU for four consecutive years now... yes Latvia has suffered a deep eocnomic crisis but you have to keep in mind we are back at the pre-crisis level which is not the case in many EU countries," Rimsevics said.

"Keynsian ideas unfortunately are not working... the stimulus the ECB is providing is seen to be a more responsible response... I do hope policymakers will not waste time and slip into crisis in order to realise we need to to more to safeguard this fragile recovery," Rimsevics concluded.

He was followed by France's Benoit Coeure, a member of the executive board of the ECB who delivered a technical analysis of the EU's response to crisis.

"Countries that have enacted a more frontloaded reform strategy have, on the whole, seen better outcomes than those that have applied a more staggered approach. Today’s low inflation expectations in the region as a whole may indeed be telling us that the approach was on average too staggered, and that it is time to accelerate," Coeure told an audience of economists and bankers.

"The main lesson of the crisis is that a major financial shock leaves a set of initial conditions that can only be worked through by policies on both the supply and demand sides of the economy – that is, structural reforms and monetary and fiscal support. Key to the effectiveness of those reforms, however, is that they are fast – to avoid drawing out the disinflationary process – and that they focus on productivity as well as competitiveness.

"Today the reform agenda facing European countries is largely about productivity, and this means that pursuing reforms aggressively is less likely to have negative short-term effects. Many of the reforms that lead to downward price pressures and higher real interest rates have already been done, and their effects are working their way through the economy now. The remaining reforms are more about boosting investment demand and productivity and so raising growth today."

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