Mugur Isărescu: Monetary policy during transition. How to manage
paradigm shifts
Presentation by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the
Annual Conference of the European Association for Banking and Financial History,
organised by the European Association for Banking and Financial History and the National
Bank of Romania, Bucharest, 7-9 June 2012.
* * *
Ladies and Gentlemen,
I started my career back in August '71, the day after President Nixon announced the
suspension of gold-convertibility of the US dollar and the introduction of a 10 percent
surcharge on American imports, thus marking the dismantling of the Bretton Woods System.
We all know what happened next: in an attempt to preserve a system of fixed exchange
rates, the Smithsonian arrangement - which set a fluctuation band of +/-2.25 percent - was
introduced in December 1971. It only lasted for six months, so that during 1972-73 fixed
exchange rates were replaced by floating regimes in most economies around the world.
Exception made the countries of the European Economic Community, which decided to
implement a joint floating arrangement and introduced rather funny concepts such as the
"snake in the tunnel".
Those were also years of intellectual controversy - I remember reading alternatively the
Newsweek articles of Samuelson and Friedman, one preaching the virtues of Keynesian
policies, while the other praised free markets and non-intervention. I witnessed the end of an
era and the dawn of another.
I also remember a conference in Salzburg in 1975, when Richard Cooper and Robert Aliber
invited Friedrich Hayek - recently awarded the Nobel Prize in economics - to give a lecture
on stagflation. I cannot forget the striking answer he gave: stagflation was the result of
Keynesian policies.
In the decades that followed I witnessed many other policy and paradigm shifts, but I have to
confess that some of them - such as quantitative easing and close to zero policy rates - I
could hardly have imagined a few years ago. However, in this paper I will deal neither with
quantitative easing nor with close to zero policy rates.
I will focus on those paradigm shifts that challenged the monetary policy conduct in Romania
during the transition years, while also approaching the theoretical controversies in the field.
Starting with the search for a better nominal anchor and the emergence of inflation targeting
as one of the mainstream monetary policy strategies, I will then tackle the issue of exchange
rate regimes and how the focus changed from intermediate arrangements to corner solutions
and back again. As this issue cannot be separated from the one of capital flows, I will then
turn to the debate "capital controls versus free movement of capital". The last three topics are
especially relevant in the context of the financial crisis, referring to the consequences of
having a majority foreign-owned banking system, the rethinking of central bank objectives
with special attention paid to financial stability and, finally, the choice of the optimal inflation
target.
1. From monetary anchors to inflation targeting
During the nineties, giving up the intermediate objective as an anti-inflationary anchor in
favor of direct inflation targeting marked a major change in the way of thinking the monetary
policy framework around the world.
Monetary strategies based on a nominal anchor, be it the exchange rate or a monetary
aggregate, still prevailed in the early nineties. While exchange rate pegs are currently still in
place in some countries (and I will come back to this later), monetary targeting slid into
oblivion.
But, at the time when the National Bank of Romania had to choose a strategy for conducting
its monetary policy, monetary targeting was not yet out of fashion. Moreover, this strategy
was adopted and implemented in the context of the stand-by arrangements signed by the
Romanian authorities with the IMF, which stipulated the monitoring of monetary aggregates
developments. The same as with fiscal and income policies and with structural reforms, the
programs agreed upon with the IMF were a strong anchor for coherent policies in the
nineties.
Another reason for choosing monetary targeting was that the alternative strategy, i.e.
exchange rate targeting, was not really an option, given the particularities of the Romanian
economy. The explicit use of the exchange rate as an anti-inflationary anchor would have
been extremely risky considering the threat of an excessive current account deficit widening,
as well as the low foreign exchange reserves in the first decade of the transition period. The
latter would have left the central bank little room for maneuver to protect the exchange rate in
the event of a speculative attack.
By the mid-nineties, the literature on monetary policy strategies came to include
recommendations varying from exclusive focus on monetary anchors to ignoring them
altogether. In 1996, Mishkin and Estrella wondered "Is there a role for monetary aggregates
in the conduct of monetary policy?" in an article that stirred heated debates. "Not really", was
the conclusion.
Even the classical example of successful monetary targeting - the Bundesbank - did not
apply the strategy "by the book". They managed to keep inflation at low levels, but the
monetary targets were missed in several years. The success of the Bundesbank's strategy
lay to a greater extent in the credibility of its clearly anti-inflationary stance - also reflected in
announcing annual inflation targets - than in strict compliance with monetary targeting rules.
Although central bankers tend to think of themselves as upholders of timeless values - as
Mervyn King put it - a new fashion started to attract followers. The era of inflation targeting
was dawning.
However, for Romania it was still too early, as it was rather unclear whether the new strategy
was appropriate for developed economies only or for emerging economies as well. Anyway,
at that time, i.e. mid to late nineties, Romania fulfilled none of the inflation targeting
prerequisites: the annual inflation rate was still far from single-digit levels, fiscal dominance
was strong, central bank credibility was not yet consolidated, while the possibility to forecast
inflation two-years ahead was wishful thinking.
In the end, as financial innovation and the unstable money velocity weakened the
money-inflation relation, monetary aggregates did abandon us. In the case of Romania - and
probably in the case of other transition economies, as well - another reason for the monetary
aggregates unsuitability as intermediate target may be attributable to the lack of financial
discipline which led to the build-up of arrears in the inefficient SOEs (largely, towards the
state and among themselves). As the arrears acted as money substitute, the role of
monetary aggregates in guiding monetary policy became increasingly irrelevant - restricting
money supply often resulted into an accumulation of arrears. Although the arrears ceased to
be an issue during the boom years, they emerged again as a problem during the crisis, the
build-up being significant in socially-sensitive sectors such as public utilities and healthcare.
Coming back to mid-2000s, after several years of preparation, the NBR joined the club of
inflation targeters in August 2005.
Nevertheless, it is worth noting that, when Romania gave up monetary targeting, Estonia was
its only peer among Central and East European countries in terms of longevity of the
monetary policy regime, with its currency board adopted in 1992. Shifts from one end to
another of the spectrum of monetary and exchange rate arrangements were common in the
region. Specifically, the Czech Republic, Poland and Hungary had various forms of exchange
rate pegs during the nineties, before shifting to inflation targeting. As for Romania, the
transition between the two regimes was smoother, since the monetary targeting framework
included elements such as the disinflationary stance, exchange rate flexibility and, of course,
the major role of monetary aggregates, which are also seen in the inflation targeting regime.
Amid the never-ending, heated debates on rules versus discretion in monetary policy, which
are so time- and energy-consuming in the academic world globally, inflation targeting may be
viewed as an attempt to make both ends meet. This strategy has the merit of combining tight
constraints in terms of the final objective (the inflation target) with a certain degree of
discretion as regards the calibration of monetary policy instruments so as to provide an
adequate response to shocks. While theoretical orthodoxy used to claim that inflation
targeting needs a free floating currency, in practice, many inflation targeters opted for a light
version of the strategy. So did many Marlboro smokers. As a rule, small open economies that
joined the club over the nineties felt that a managed float regime would serve them better.
This was also the line pursued by the NBR when introducing inflation targeting in 2005, with
the extensive technical support generously offered by the IMF and the Czech National Bank.
At that time, inflation targeting seemed poised to become the monetary policy framework in
most countries that did not have fixed exchange rate regimes in place - and this was still the
case only a few years ago. However, the global crisis broke out and changed the order of
priorities on policymakers' agenda. It remains to be seen how inflation targeting will adapt to
the post-crisis economic and financial environment, which also challenges the overriding
importance of the low inflation goal. While monetary targeting failed to survive for reasons of
the break in the monetary aggregates-inflation relation (in other words, the nominal anchor
was unable to actually "anchor" inflation), inflation targeting will have to rely more on its
flexible component, be it constrained, in order to be successful in an environment where
financial stability needs particular attention.
2. Exchange rate arrangements: from managed float to corner solutions and
back again
As I mentioned earlier, let me turn now to the developments in exchange rate arrangements.
In the early nineties, when I became Governor, almost two thirds of the countries had some
form of managed float. By the end of the same decade, their share had dropped to around
one third. In a seminal paper (Fischer, 2001) this "move towards corner solutions" was
viewed as a response to the impossible trinity under free capital movements. At that time
Romania still had capital controls in place. But when we completed the capital account
liberalization, in September 2006, the issue had become not only academic, but also a
practical one. By then Romania had adopted inflation targeting and the problem seemed to
have been solved: such a regime seemed incompatible with any type of managed float of the
exchange rate.
In reality, things proved to be much more complicated. Despite NBR interventions, the
exchange rate of the leu witnessed a significant nominal appreciation immediately before and
after EU accession (January 2007). In retrospect, I would say that it was more difficult to
conduct monetary policy when confronted with massive capital inflows than with the scarcity
thereof. When flooded by capital inflows (especially when concentrated in non-tradable
sectors), a conflict between price stability and external equilibrium emerges. Interest rate
hikes may be needed in order to manage aggregate demand and anchor expectations, but
this would entail further capital inflows and an unsustainable nominal appreciation of the
exchange rate.
This was the dilemma the NBR faced between 2006 and 2008, when the current account
deficit exceeded 10 percent of GDP, a level which was clearly unsustainable, despite being
largely financed through foreign direct investments. Amid the ongoing international financial
crisis, a significant adjustment of the current account deficit became unavoidable. Indeed, it
narrowed from 11.6 percent of GDP in 2008 to 4.2 percent of GDP in 2009 (a level around
which it remained thereafter). Had Romania been on a fixed exchange rate, the entire burden
of the adjustment would have fallen onto the real sector of the economy, with the ensuing
social and political costs. Conversely, had Romania allowed a completely free floating of its
currency, no adjustment in the real sector would have probably occurred (including a
25 percent wage cut in the public sector and the redundancy of more than 200,000 public
employees). At the same time, too abrupt a depreciation would have generated a much
larger share of non-performing loans (currently, they stand at nearly 16 percent of total
loans), with the result of worsening banking indicators. The flexibility we have retained in
managing the exchange rate proved a valuable tool in mitigating the consequences of the
crisis.
At the same time, theory has evolved and the "managed floating plus" concept (introduced by
Goldstein in 2002) gained recognition. In the aftermath of the Argentine crisis it became
obvious that hard pegs could not solve the problems of an overvalued real exchange rate,
limited flexibility of domestic costs and prices, and too much public debt to allow
countercyclical fiscal policy. (Incidentally, outside of the EMU, all other 37 economies with no
independent legal tender were small, with the exception of Argentina and Hong Kong SAR).
Let me briefly recall the benefits of the "managed floating plus" strategy, as described by
Goldstein: the more currency mismatch is brought under control, the less should there be
fear of floating; if the exchange rate is allowed to move, the greater will there be the
awareness of currency risk and the incentive to hedge against it; the less necessary it is to
see the exchange rate as a target, the more likely inflation targeting will be successful and,
hence, the more willing will foreign investors be to lend in local currency; the greater the
availability of domestic-currency denominated instruments, the better the prospects for
reducing currency mismatch.
Let me add two comments: first, monetary policy alone cannot ensure current account
sustainability in the long run. It also takes good fiscal and structural policies. The best
monetary policy can achieve is "buying time" for these policies to be implemented, without
jeopardizing its own objectives.
Second, managed floating faces a composition problem on the global scale. Attempts by
many countries to keep their currencies at an undervalued rate may end up in a race to the
bottom - akin to the "beggar-thy-neighbor" policy of the '30s. Multilateral or global
arrangements are perceived as the best solution to such problems (Flassbeck, 2004). As
changes in the exchange rate, deviating from purchasing power parity, affect international
trade the same way as changes in tariffs, they should be governed by multilateral
regulations.
As we can see, both theory and practice have moved, in the last two decades, full-circle:
from managed float to corner solutions and back again. Under these circumstances, the best
a policymaker can do is to stay open-minded and assess the merits of each individual theory
in the context of the country's particularities.
3. Capital controls vs. free movement of capital flows
Now let me briefly turn to capital flows and related issues. The crisis that broke out in 2007
entailed a massive reduction in private capital flows, which had previously generated
developments that led to the accumulation of imbalances conducive to the crisis itself. These
imbalances were manifest in the overheating of emerging market economies, the
over-appreciation of currencies, the swelling private foreign debt, credit and asset prices, as
well as in the wider current account deficits and the larger currency mismatches in the private
sector. However, towards end-2009, the global economy looked poised to exit the financial
crisis and capital flows to emerging market economies in Latin America, Asia and Central
and Eastern Europe seemed to rebound. This trend looked set to strengthen and expand, in
Romania as well, in the early months of 2011.
Against this background, the idea of introducing capital controls in emerging market
economies has gained increasing support. Even the IMF, which has historically opposed
controls, has softened its hard-line approach. Thus, the Fund has recently published several
papers concluding that, under particular circumstances, controls are justifiably part of the
policy toolkit of emerging market economies faced with massive capital inflows. There were
some economists in Romania who opposed the removal of controls, as it acted as an
obstacle to the shift from monetary targeting to inflation targeting back in 2005. Similar
recommendations were formulated by the IMF mission under Romania's first precautionary
stand-by arrangement, which suggested that the liberalization of monetary flows, scheduled
for 2005-2006, be postponed until the interest rate differential narrows sufficiently and the
banking system is prepared to deal with large inflows of volatile capital. Such a
postponement was not possible as Romania's entry into the European Union in 2007 was
conditional upon full capital account liberalization.
In order to better understand the role of capital controls, we need to look first at the benefits
of capital inflows. Supporters of free capital movement rightly point out that capital flows are
actually a source of additional financing for emerging market economies, while also providing
opportunities for risk diversification and helping avoid abrupt changes in consumption (Ostry
et al., 2011).
The keyword here is the capital volume. Excess capital triggers the aforementioned
imbalances. Then it is only reasonable to admit that the actions we need to take should
contain capital inflows to levels that (i) allow the economy to operate at its potential rate,
(ii) do not lead to the accumulation of foreign reserves above the adequate level, and (iii) do
not determine currency overvaluation.
Controls might very well ensure the fulfillment of these criteria, but there are two problems
here. First, it might happen that such controls are not effective, meaning they can easily be
circumvented. Nearly two thirds of the increase in the liabilities of foreign-owned banks in
Romania during 2005-2008 occurred after the reserve ratio was raised to 40 percent.
Second, even assuming they cannot be evaded, controls need to be discriminatory1, so as to
allow, for instance, equity inflows and discourage debt flows.
But controls come at a very high price. Capital flows were subject to controls in all countries
until the end of the sixties. Moreover, controls were also in place for lending and deposit
rates, the volume of private sector credit, as well as for the business scope of certain groups
of intermediaries. The positive effect of these controls was enhanced stability of the financial
system: no banking crisis broke out during 1945-1971 (Eichengreen and Bordo, 2003). But
the negative consequences were not negligible. Banks innovated less, they limited lending to
large and secure firms, and operated on a less efficient basis. Once controls provided
protection against crises, central banks became less interested in financial stability and
preserved minimum expertise in this respect (Goodhart, 2010).
There is also the issue of anteriority. Recent research concluded that controls yielded better
results in countries where controls had been in place beforehand. Should we therefore
consider preventive controls? This would mean ignoring the fact that large capital inflows are
temporary in nature. Judging by the fact that controls are more efficient provided they are in
place before the resumption in large capital inflows, should we use them from the very start
of a wave of capital inflows, before resorting to macroeconomic policies? I don't think so. And
what would be the best choice for emerging countries that are members of economic areas
based on free capital movement, such as the European Union?
Any scheme indicating where controls should be positioned in the policy toolkit of emerging
countries needs to be based on a clear-cut distinction between risks associated with large
capital inflows and the actual quantities (flows). Controls have a direct impact on quantities.
But macroeconomic policies can have an indirect influence on quantities. Once the exchange
rate has appreciated enough to near its equilibrium level and foreign reserves have reached a
point beyond which any further purchases are suboptimal, changes in macroeconomic
policies may go on.
We may move from a deficit position to public budget surplus. The lesson that can be drawn
from recent experience is that policymakers' hesitations in this regard may prove costly.
Monetary policy has room to lower interest rates just as long as this does not jeopardize the
inflation target objectives. From that point on, fiscal policy is the only macroeconomic policy
left in the fight against capital inflows. As soon as the bubble associated with massive capital
inflows unavoidably bursts, the fiscal surplus will help the government make up for the
squeeze in private demand by allowing the public budget to slip into deficit.
At the same time, potential risks associated with large capital inflows may be addressed via
micro- and macroprudential measures. Two processes aimed at safeguarding the stability of
financial institutions were initiated as early as the seventies, along with the liberalization of
capital flows. One of these processes, set at microeconomic level, marked the establishment
of a system of capital requirements. This led to Basel I back in 1986, followed by enhanced
versions, including Basel III, which is a response to the ongoing crisis.
The other process consisted in creating a closer link between prudential regulations and
macroeconomic issues. In this vein, the Cooke Committee coined the term "macroprudential"
in 1978. The concept was refined later on. Lamfalussy pointed out that the risk perception
could be inadequate since it focused narrowly on the past performance of individual
sovereign loans. The Cross Report (ECSC, 1986) warned against the risks that financial
innovation (in particular derivatives and securitization) posed to the financial system as a
whole. Finally, Crockett (2000, 2001) referred to the impact of regulation on the procyclicality
of the financial system and the implications of the failure of systemically-significant
institutions.
Today we know that micro- and macroprudential measures are effective in addressing risks
associated with capital inflows. But macroprudential measures need to be resorted to with a
certain degree of precaution as well, since they may actually foster capital inflows and thus
run counter to macroeconomic policies. Potential output declined severely in the aftermath of
the crisis. A possible resumption in capital inflows would take aggregate demand higher and
hence generate an inflationary production gap. Emerging countries would resort to fewer
forex market interventions, allowing their currencies to appreciate in order to contain inflation.
However, the long-term financial stability gains derived from macroprudential measures
entail further capital inflows. The tolerance for currency appreciation (fewer interventions)
may be reversed in light of the larger capital inflows. Moreover, a stronger currency may
foster further inflows of portfolio investment. This goes to prove that not all measures trying
to fend off capital flows are necessarily successful in reducing the incentives for capital
inflows.
Let me conclude by saying that the available measures to address large capital inflows are
not safe from side effects. The policy mix needs to be conceived so as to maximize the
benefits of capital inflows while insulating against related risks (Zhu, 2011). In a world where
sustainable economic growth hinges on free markets, capital controls should only be
considered as a measure of last resort, if at all. Prudential measures should be designed to
minimize the distortions they trigger and should be resorted to only after all macroeconomic
options have been exhausted.
4. Foreign-owned banks - asset or liability?
Another dominant paradigm which came under scrutiny in recent years is that of the
superiority of foreign-owned banks vis-à-vis domestically-owned banks, both in times of
sustained growth and in times of crisis. The arguments for this view are well-known and they
have to do with improved efficiency, better expertise, alleviation of the shortage of domestic
capital, and increased competition. Also, some authors (for instance, Haas and Lelyveld in
2009) claim that the presence of international banking groups on local markets has a positive
effect in mitigating the consequences of a crisis.
Before making my own remarks on this matter, let me introduce some caveats: first, nobody
disputes the superiority of foreign-owned private banks with respect to domestically-owned
state banks in newly emerged market economies. The comparison needs to be made
between foreign-owned private banks and domestically-owned private banks. In this respect,
it is worth mentioning that Central and Eastern Europe is the only region in the world where
foreign-owned banks dominate as a share of total assets, whereas in the developed markets,
Latin America or Asia, domestic private banks are prevalent. Second, this dominance is a
relatively new phenomenon: the share of foreign-owned banks became prevalent as late as
the first years of this century, even in Central and Eastern Europe. In other words, it has
been possible to verify the paradigm in practice only in the last few years.
It is fair to say that foreign-owned banking prevalence in Central and Eastern European
countries has happened more by default than by design. After a few banking crises which hit
the region in the late nineties, the lack of domestic private capital, combined with the fragile
situation of the state budgets, made it compulsory to privatize the existing banks by selling
them to foreign entities.
I must confess that I also advocated the penetration of foreign capital into the Romanian
banking sector. When my tenure as Prime Minister ended in late 2000, one piece of advice I
gave to my successor was that the privatization of banks should continue as a means to
promote restructuring of the loss-incurring SOEs and to stimulate convergence to the EU. I
still believe that it was the right call, as foreign-owned banks had a favorable impact on
economic growth and therefore played their part in the catching-up process, even if - ten
years later - Nouriel Roubini sees the large share of foreign-owned banks in the Romanian
banking system as a liability.
The counterfactual argument "What would have been the performance of
domestically-owned private banks?" does not withstand scrutiny: domestic private capital
simply did not exist. However this intellectual exercise is worth doing, given some
shortcomings of foreign-owned banks, which were revealed afterwards.
One such shortcoming was the excessive euroization of some economies in the region
(Romania, Hungary, Baltic states), given the reliance of foreign-owned banks on their parent
banks for cheap financing. Excessive euroization has proved to be a liability for all parties
concerned: for the public, which became hostage to exchange rate risk without being
properly hedged, for the central banks, which saw their transmission mechanism eroded, and
even for the commercial banks themselves, which quite often had a large mismatch between
loans and deposits in foreign currency. Moreover, some of the banks have extended credit in
"exotic" currencies (Swiss franc, Japanese yen), the strict regulations in their home countries
(Austria, Belgium) notwithstanding, thereby increasing the vulnerability to adverse shocks
(Banai, Kiraly and Varhegyi, 2009). Would a predominantly domestically-owned private bank
system have behaved differently? Probably, given the limited access to external financing
and hence a more balanced portfolio. Witness in this respect the situation in Asia or Latin
America, where foreign exchange credit did not skyrocket in the same way, even in times of
economic boom.
Other criticisms related to the behavior of foreign-owned banks during times of boom are,
probably, undeserved: first, the claim that their lending went mainly into non-tradables, such
as retail or real estate, where profits were larger and more rapidly made. Domestic private
banks would have probably done exactly the same: empirical evidence points to the fact that
they were not longer-sighted than their foreign-owned competitors. Second, foreign-owned
banks are often criticized for "cherry-picking", their customers being highly profitable, reliable
corporations (often headquartered in the same state of origin). I think this criticism is also
undeserved, because the alternative of lending indiscriminately to unknown clients (into
which many banks have indulged) has proved to be even worse.
Turning to the behavior of foreign-owned banks during the recent crisis, the evidence is also
mixed. On one hand, it is true that international banking groups are the ones which easily
spread the contagion (Goldberg, 2009). Even in the absence of abrupt deleverage,
foreign-owned banks had to cope with much diminished foreign financing and shifted from
financing the private sectors to financing the public sectors of their host countries. Despite
the reductions in monetary policy rates, credit in domestic currency remains sluggish at best.
For the time being, however, it is fair to say that foreign parent banks have maintained their
support for the branches and subsidiaries in Central and Eastern Europe. Most of them had
not been engaged into trading sophisticated instruments such as derivatives, so that this type
of losses has been relatively contained. It has also helped that the banks present in the
region are not major global players, so that contagion is often limited. On the other hand,
many of the banks had been involved into financing the real estate boom, and the ensuing
losses are only gradually being recognized.
As a conclusion to this paradigm, the dominance of foreign-owned banks proved to be both
an asset and a liability and it is too early to draw a final balance before the international
financial crisis is over. Another conclusion is that in an environment of good, swiftly and
decisively-implemented policies that are accepted by the public, the euroization of the
economy is not mandatory. Witness in this respect is the experience of the Czech Republic,
which has brought inflation down early on, making lending in domestic currency as attractive
as that in foreign currency.
5. Central bank's objective: should financial stability be added?
Before the outbreak of the global financial crisis, the conventional lines of thought advocated
the idea that markets do self-correct always. The overconfidence in the infallibility of the
invisible hand of the market generated a widespread belief that ample interventions by the
authorities were not warranted in order to contain economic and financial imbalances at an
early stage.
Moreover, there was a prevailing view in the academic world that inflation was the main
culprit for financial instability. By way of consequence, safeguarding price stability was
looked upon as an almost sufficient prerequisite for promoting financial stability. Against this
background, central banks' core contribution to preserving and strengthening financial
stability consisted in delivering low inflation rates.
However, not everyone agreed. Prior to the outburst of the crisis, several economists had
publicly expressed doubts on the viability of mainstream economic thought or had warned
against some of its vulnerabilities. Special mention deserves Crockett, who claimed ever
since 2003 that the "peace dividend" yielded by the successful war against inflation had not
lived up to expectations and therefore the battlefront against financial instability should not be
overlooked. Also worth mentioning is Caruana, who pointed out in 2005 that, while a
highly-developed decision-making framework was in place for pursuing monetary policy,
financial stability was less deeply looked into. Let me add that, back in 2006, the key
message of my dissertation at the University of Piteşti was that financial stability is, in turn,
instrumental to monetary policy effectiveness and hence to safeguarding price stability.
At the end of the day, it was the global crisis that invalidated