Vítor Constâncio: 2012 Bernácer prize award ceremony in honour of Nicholas Bloom Speech by Mr Vítor Constâncio, Vice-President of the European Central Bank, on the occasion of the Awarding Ceremony of the Germán Bernácer Prize for Promoting Economic Research in Europe to Nicholas Bloom, Madrid, 24 September 2013. *  *  *  I wish to thank Marie Hoerova for the help in preparing this text. Ladies and Gentlemen, It is a pleasure for me to be part of this session to award the 2012 Germán Bernácer Prize to Nicholas Bloom, Professor of Economics at Stanford University. Nicholas Bloom has made influential contributions to the academic debate in two broad areas, both of which are of great relevance for central bank policy-makers. First, his research on the effects of policy and economic uncertainty on business cycles helped us understand better some of the key contributing factors to the protracted slump in output during what has become known as the Great Recession. Second, his research on the determinants of good management practices at the firm level provided important insights on how to support long-term economic growth and competitiveness, including in the European context. The financial and economic crisis that started in the summer of 2007 brought about unprecedented challenges for central bank policy-makers. Some well-accepted paradigms and widely used models have come to be questioned. It is of course the fact of life that central bankers operate in an ever-changing and, to use one of the keywords from Professor Bloom’s research, uncertain world.

As the operator of NBO, Norges Bank is also working on measures that will strengthen the settlement system centrally. 5  Committee on Payments and Market Infrastructures (CPMI) – previously the Committee on Payment and Settlement Systems (CPSS) – and International Organization of Securities Commissions (IOSCO). 6  The financial infrastructure comprises the payment system and securities settlement system, including central counterparty systems. 7  The following systems were evaluated: Clearing and settlement systems for payments, the securities settlement system, the VPS registry function and the central counterparty Oslo Clearing, the latter two in collaboration with Finanstilsynet. The evaluation was presented in the Norges Bank Financial Infrastructure Report 2014. 4  BIS central bankers’ speeches  Outsourcing Today’s financial infrastructure is based on advanced technical solutions. This places considerable demands on system developers and operators. This expertise is costly and may be difficult to retain. Owners have largely outsourced technical operations. This provides greater flexibility. At the same time, outsourcing can make it more challenging to manage operational risk. The fixed costs associated with operation and development can be high. This allows operators to exploit economies of scale. A possible result of outsourcing is that several systems use the same service provider. This may reduce costs. On the other hand, such a concentration may weaken competition, while risk is concentrated in a single provider. Any failure in the service provider may then impact large parts of the financial infrastructure. The systems are vulnerable to technical failure and to external attacks.