OeNB Chief Kocher for End of Austria Surcharge

Sustainable measures should reduce inflation without affecting the economy. OeNB Chief Martin Kocher views direct price interventions with skepticism. However, he would support the abolition of the so-called Austria surcharge in supermarkets.

OeNB Chief Kocher: Transparency and Competition Key Factors in Inflation

Abolishing this surcharge at the EU level would "sustainably impact the development of food prices," Kocher said in an interview with APA. The surcharge involves territorial delivery restrictions, which often mean higher prices for small countries in Europe. In the debate about food prices, there is often no clear distinction between the price level and its development. The price level in Austria is higher than, for example, in Germany, while the increases since 2019 have been higher in the neighboring country and other European countries than in Austria. The share of food in the shopping basket is also lower than most people would think, but for the average household, the expenses do play a significant role.

The level could be addressed by abolishing the Austria surcharge. In terms of development, it is "about transparency and, of course, ensuring that consumers have the opportunity to really compare the offers well," said Kocher. In general, more transparency and a functioning competition are the decisive factors to get inflation under control. A price comparison calculator for food is, however, not unproblematic, as for many consumers, other factors such as quality also count besides the price. Kocher understands the concern of domestic agriculture that cheap products from abroad could displace higher-quality domestic products through a price comparison calculator.

OeNB Chief Kocher Skeptical of Direct Price Interventions

Kocher is also skeptical of direct price interventions - not only for food but also, for example, for rents. "I believe that direct interventions often lead to the negative side effects being stronger than the positive effects on the price," said Kocher. A negative effect of a price intervention would be a supply shortage. The federal government plans to decide on several measures to curb inflation during its two-day government retreat starting on Tuesday. Vice-Chancellor Andreas Babler (SPÖ) has already announced interventions in the increase of free rents, among other things.

Regarding how the economic package, also expected for the government retreat, amounting to an estimated 400 million euros, should be best invested, Kocher remained reserved. From an economic perspective, there are two prerequisites to stimulate growth: First, the global economic weakness must be overcome. "The second prerequisite from my point of view is that we generate a somewhat more positive future expectation," said Kocher. For this, signals from politics are needed that reforms will also be tackled. Then companies would also have more confidence in the location again.

Cash Remains Important According to OeNB Chief Kocher

Apart from inflation and ensuring price stability, which is the top priority of the National Bank, cash remains a relevant topic for the new governor. The project initiated under his predecessor Robert Holzmann, to install ATMs in remote rural areas, will be maintained. In the coming years, up to 120 devices are to be installed in communities where residents would otherwise have to travel long distances to the nearest cash dispenser. Kocher does not see cash as being in danger; the discussion is misguided, as no one in the Eurozone doubts cash. "Everyone knows that cash is important, everyone wants to preserve cash. There are plenty of assurances that this will happen," said the governor. The OeNB also clearly advocates for freedom of choice in payment transactions.

Digital Euro Important Project

The digital euro will not change that. Its introduction and especially the benefit for the population are repeatedly questioned. Kocher explains the benefit of the digital euro as follows: "You can pay cashless across Europe anonymously and without costs. This is currently possible in many areas, but not in this combination." Europe is still heavily dependent on service providers outside the continent - especially from the USA - in payment transactions. "The digital euro ensures that we are fully sovereign in this area. That's why I believe it is an important project." In the future, "stablecoins" - a type of cryptocurrency tied to another asset, usually a traditional currency like the US dollar - will make digital payment transactions even more complex. "Therefore, it is important to have a publicly 100% guaranteed form of digital payment that works relatively simply."

Strategy Process in the OeNB Underway

A strategy process is currently underway within the National Bank, which is to be completed by the end of the year. In this process, priorities for the work of the OeNB will be set. Macroeconomic research will continue to have a high priority, and the OeNB intends to communicate its expertise more externally in the future. However, the former ÖVP labor and economic minister wants to hold back on political interventions. "There are certain areas where we play a major role, where it is important, and I will continue to raise my voice as I have always done when I deem it necessary." But: "It is not the role of the governor to constantly interfere in the government's economic policy decisions." Regarding the internal structures of the OeNB, Kocher currently sees no major need for adjustment. Personnel-wise, no major upheavals are currently in sight.

(APA/Red)

This article has been automatically translated, read the original article here.