Christian Noyer: Opening address, “Globalisation, Inflation and Monetary Policy” Symposium Opening address by Mr Christian Noyer, Governor of the Bank of France, at the International Symposium on “Globalisation, Inflation and Monetary Policy”, organised by the Bank of France, Paris, 7 March 2008. *  *  *  I am delighted to open this 5th international symposium of the Banque de France, which is an opportunity to bring together heads of central banks and international institutions, leading academics and directors of private banks, as well as representatives of industrialised and emerging countries, in order to address a topical issue of common interest and concern to us all. Today’s debate will be rich and intense. The first session, chaired by Jean-Claude Trichet, President of the European Central Bank, will present the main concepts and stylised facts of globalisation and world inflation. The second session, chaired by Jean-Pierre Roth, President of the Swiss National Bank, will focus on the links between globalisation and the determinants of domestic inflation. The third session, which will take the form of a round table chaired by Nout Wellink, Governor of the Nederlandsche Bank, will examine the impact of financial globalisation on growth and asset prices. Lastly, the fourth session, chaired by Guillermo Ortiz, Governor of the Bank of Mexico, will assess the implications for the conduct of monetary policy. Jacob Frenkel has agreed to take on the difficult task of making the concluding remarks for this symposium.

The monetary policy transmission mechanism is more fraught with uncertainty and less "linear" than it used to be, as shocks on asset and risk prices introduce discontinuity into financing conditions. These developments underscore two interesting issues in particular that I would like to briefly consider. The first concerns monetary policy responses. It will have escaped nobody’s attention that these responses are not identical across all countries. In my view, this reflects different situations more than divergent approaches. All of the world’s economies are not affected in the same way by property market shocks or developments on credit markets. In particular, we can observe that the distribution of credit remains very dynamic in Europe and that, in most euro area countries, property markets remain relatively stable. More fundamentally, it seems to me that developments in the economic and financial context of globalisation bear out and reinforce the importance given to what, in Eurosystem parlance, we call monetary analysis, i.e. the examination and analysis of the main monetary and financial aggregates. We derive three major benefits from our monetary pillar. First, it favours the anchoring of long-term inflation expectations, which is essential when, as is currently the  1  Guilloux S. and Kharroubi E. (2008), “Some preliminary evidence on the globalization-inflation nexus”, Working paper series N°195, January  2  BIS Review 28/2008  case, instantaneous pressures are strong. Second, it constitutes an integrated framework for the analysis of financial and monetary developments, which is particularly useful in times of structural change and turmoil on credit markets.